What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2026-09-09 compared with 2025-09-09 · 301 added, 311 removed, 412 unchanged (60% of the section changed)

4 unchanged sentences

If any of the following risks occur, our business, financial condition, operating results and prospects could be materially and adversely affected.

You should read these risk factors in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 and our consolidated financial statements and related notes in Item 8 of this Annual Report.

Summary of Risk Factors

2 unchanged sentences

• Our growth strategy may not prove viable.

Our ability to grow depends upon a number of factors, including recruiting and retaining participants, finding suitable geographies for new centers, the outcome of our organizational and enterprise efficiency initiatives, entering into government payor arrangements in new jurisdictions, results of audits, investigations and ongoing or new remediation efforts, ensuring compliance with regulatory and contractual requirements, identifying appropriate locations for new and existing centers, and hiring members of our IDTs and other employees.

Our ability to grow depends upon a number of factors, including recruiting and retaining participants, finding suitable geographies for new centers, the adoption of government actions which may preclude us from acquiring or opening new centers in certain jurisdictions, the outcome of our organizational and enterprise efficiency initiatives, entering into government payor arrangements in new jurisdictions, results of audits and investigations, ensuring compliance with regulatory and contractual requirements, identifying appropriate locations for new and existing centers, and hiring members of our IDTs and other employees.

• Our growth strategy depends upon our ability to identify and complete acquisitions, joint ventures and other strategic partnerships.

3 unchanged sentences

Our inability to recruit new eligible participants and retain existing participants has adversely affected, and could in the future, adversely affect our growth strategy.

• Our overall business results have been and we expect will continue to be impacted by ongoing macroeconomic and industry-related challenges.

Macroeconomic and industry challenges, including labor shortages, labor competition, high inflation, tariffs and trade disputes, have impacted and we expect will continue to impact our business operations.

• Our overall business results have been, and we expect will continue, to be impacted by ongoing macroeconomic, geopolitical and industry-related challenges.

Macroeconomic and industry challenges, including labor shortages, labor competition, high inflation, and supply chain disruptions as a result of tariffs and trade disputes, have impacted and we expect will continue to impact our business operations.

The healthcare sector continues to experience workforce shortages, particularly in geriatrics, primary care and direct care roles, as well as a complex set of challenges in hiring additional professionals due to higher demand for healthcare services, the pipeline of qualified professionals, and with respect to direct care roles, changes in federal immigration policy and enforcement.

• Under PACE contracts, we assume all of the risk that the cost of providing services will exceed our compensation .

Most of our revenue was derived from capitation agreements with government payors in which we receive fixed per member, per month (“PMPM”) fees.

To the extent that our participants require more care than anticipated and/or the cost of care increases, aggregate fixed capitation payments may be insufficient to cover the costs and could have a material adverse effect on our business.

• Our dependence on Medicare and Medicaid exposes us to risks from government funding reductions, legislative changes, including the Reconciliation Act, and federal and state budgetary pressures.

A majority of our capitation revenue is derived from a limited number of government payors, particularly Medicare and Medicaid, concentrated in Colorado and California.

Federal cost-cutting measures could significantly decrease healthcare-related federal funding and modify our compliance landscape.

The Reconciliation Act mandates significant reductions in federal Medicaid spending and other significant changes.

These federal changes, combined with restrictions on state provider taxes, create budgetary pressures that may lead to reductions in optional Medicaid benefits, workforce shortages at government oversight entities, and downward pressure on our capitated fee payments, adversely affecting our operating results and limiting our expansion.

• Reductions in PACE reimbursement rates, changes in risk adjustment methodologies or changes in the rules governing PACE programs could have a material adverse effect on our financial condition and results of operations.

We receive nearly all of our revenue through the PACE program.

As a result, our operations are dependent on government funding levels for PACE programs.

Any changes that limit or reduce general PACE rates could have a material adverse effect on our business.

• We have experienced and expect to continue experiencing increased costs and expenditures in the future.

In fiscal year 2026, we continued several initiatives intended to lower our costs and expect to continue making investments in growing our business, including through the implementation of Company-wide transformation initiatives.

If we are not able to execute or realize the benefits of our transformation initiatives, our profitability could decline.

• We have faced, and continue to face inspections, reviews, audits and investigations under federal and state government programs and contracts .

2 unchanged sentences

• We are subject to legal proceedings, enforcement actions and litigation, malpractice and privacy disputes, which are costly and could materially harm our business.

We are party to lawsuits and legal proceedings from various parties.

From time to time, we are party to lawsuits and legal proceedings from various parties.

These matters are often expensive and disruptive to our business operations.

Among others, we are currently subject to civil investigative demands and stockholder lawsuits.

These matters could result in significant cash settlements, and the time necessary to litigate could harm our business, financial condition, and results of operations.

• Under PACE contracts, we assume all of the risk that the cost of providing services will exceed our compensation .

Most of our revenue was derived from capitation agreements with government payors in which we receive fixed PMPM fees.

• We have experienced and expect to continue experiencing increased costs and expenditures in the future.

In fiscal year 2025, we continued several initiatives intended to lower our costs and expect to continue making investments in growing our business, including through the implementation of Company-wide transformation initiatives.

If we are not able to execute or realize the benefits of our transformation initiatives, our profitability could decline.

• Our revenues and operations are dependent upon a limited number of government payors, particularly Medicare and Medicaid.

When aggregating the revenue associated with Medicare and Medicaid by state, a majority of our revenue was derived from a limited number of government payors.

We expect a majority of our revenues will continue to be derived from a limited number of key payors, who are able to terminate their contracts with us upon the occurrence of certain events, adversely affecting our operating results and limiting our expansion.

• Reductions in PACE reimbursement rates or changes in the rules governing PACE programs could have a material adverse effect on our financial condition and results of operations.

We receive nearly all of our revenue through the PACE program, which accounted for 99.8% of our revenue for each of the years ended June 30, 2025 and 2024.

As a result, our operations are dependent on government funding levels for PACE programs.

Any changes that limit or reduce general PACE rates could have a material adverse effect on our business.

• Our records and submissions to government payors may contain inaccurate or unsupportable information regarding risk adjustment scores of participants, which could subject us to repayment obligations or penalties.

CMS may audit PACE organizations’ risk adjustment data submissions.

Erroneous data submissions could result in inaccurate revenue and risk adjustment payments.

Correction or retroactive adjustments in later periods could require us to refund a portion of the revenue that we received, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

• Our records and other information and materials submitted to government payors may contain inaccurate or unsupportable information applicable to participants’ risk scores, which could subject us to repayment obligations or penalties.

CMS may audit risk adjustment-related data.

Erroneous data submissions could result in inaccurate revenue and risk-adjusted payments.

Correction or risk adjustment reconciliations in later periods could require us to refund a portion of the revenue that we received, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

• Allegations of failure and failure to adhere to all of the complex government laws and regulations applicable to our business, have had, and could in the future have, a material adverse effect on our business, results of operations, financial condition, cash flows, reputation and stock price.

8 unchanged sentences

Our growth strategy may not prove viable and we may fail to realize expected results therefrom fully or at all.

Our ability to grow depends upon a number of factors, including recruiting and retaining participants at new and existing centers, finding suitable geographies that have aging populations and viable rate structures, the outcome of our organizational and enterprise efficiency initiatives, entering into government payor arrangements in new jurisdictions, results of audits, investigations and ongoing or new remediation efforts, ensuring compliance with regulatory and contractual requirements, identifying appropriate locations for new and existing centers, completing build-outs of new centers within proposed timelines and budgets and hiring members of our IDTs and other employees.

Our ability to grow depends upon a number of factors, including recruiting and retaining participants at new and existing centers, finding suitable geographies that have aging populations and viable rate structures, the adoption of government actions which may preclude us from acquiring or opening new centers in certain jurisdictions, the outcome of our organizational and enterprise efficiency initiatives, entering into government payor arrangements in new jurisdictions,

results of audits, investigations and ongoing or new remediation efforts, ensuring compliance with regulatory and contractual requirements, identifying appropriate locations for new and existing centers, completing build-outs of new centers within proposed timelines and budgets and hiring members of our IDTs and other employees.

Our growth strategy involves a number of risks and uncertainties, including that:

2 unchanged sentences

This competition has intensified due to the availability to seniors of other programs similar to PACE and the ongoing consolidation in the healthcare industry, which may increase our costs to pursue such opportunities;

• implementation of our organizational and enterprise efficiency initiatives may be more expensive than anticipated and we may fail to realize the anticipated benefits thereof within the expected timeline, or at all;

• implementation of our continuing clinical and operational value initiatives may be more expensive than anticipated and we may fail to realize the anticipated benefits thereof within the expected timeline, or at all;

• we may not be able to recruit or retain a sufficient number of new or existing participants to execute our growth strategy or offset costs relating to marketing, opening de novo centers or executing acquisitions;

6 unchanged sentences

As previously disclosed, the California Department of Health Care Services (“DHCS”), suspended the state-required attestations for a planned de novo center in Downey and for the de novo center we acquired in Bakersfield, California in 2023.

There is no guarantee that such attestations will be reinstated or that similar situations will not occur in the future.

While we have withdrawn our PACE application for the Downey center, there is no guarantee that the attestation for Bakersfield will be reinstated or that similar situations will not occur in the future.

One element of our growth strategy is to build de novo centers.

8 unchanged sentences

An element of our growth strategy is to identify, pursue and successfully complete and integrate tuck-in acquisitions, joint ventures and other strategic partnerships to expand our operations and support our growth.

For example, in December 2023, we acquired all of the issued and outstanding membership interests of two California-based PACE programs, ConcertoCare PACE of Bakersfield, LLC and ConcertoHealth PACE of Los Angeles, LLC (collectively, “Concerto”);

in May 2024, we entered into a joint venture with Orlando Health with respect to the InnovAge Florida PACE - Orlando (“InnovAge Orlando”) center in Florida;

and in August 2025, we entered into a joint venture with Tampa General Hospital with respect to InnovAge Florida PACE - Tampa center in Florida.

Most recently, we entered into a joint venture with Orlando Health with respect to the InnovAge Florida PACE - Orlando (“InnovAge Orlando”) center in Florida and with Tampa General Hospital with respect to the InnovAge Florida PACE - Tampa center in Florida.

We intend to continue pursuing relationships with key stakeholders, existing organizations and other care providers in order to form partnerships in target geographies.

However, acquisitions, joint ventures and other strategic partnerships, involve numerous risks, including failure to consummate negotiated transactions, difficulties in successfully integrating the operations and personnel, navigating the necessary regulatory approval requirements, including securing regulatory safe harbors necessary for healthcare related join ventures under the Anti-Kickback Statute, distraction of management while overseeing the transactions, and disruption of, our existing operations, difficulties in entering new markets in which we have no or limited direct prior experience, difficulties in managing novel challenges in markets we have no or limited direct prior experience, and difficulties in achieving the synergies we anticipated.

In addition, we incur costs associated with potential acquisitions that we pursue or fail to close, including as a result of litigation related to a failed transaction.

We also may need to expend resources to ensure target and acquired centers are operating in compliance with regulatory and contractual requirements, as well as any corrective action plans.

Any failure to select suitable opportunities at fair prices, conduct appropriate due diligence, acquire, and successfully integrate the acquired center, including particularly when acquired centers operate in new geographic markets, could materially and adversely impact our growth strategies, financial condition and results of operations.

However, acquisitions, joint ventures and other strategic partnerships, involve numerous risks, including potential failure to consummate negotiated transactions, difficulties in successfully integrating operations and personnel, navigating the necessary regulatory approval requirements, including compliance with federal Anti-Kickback Statute regulatory safe harbors applicable to such transactions, time constraints and competing interests of management while overseeing such transactions, and disruption to our existing operations, operational and compliance challenges in entering new markets in which we have no or limited direct prior experience, and difficulties in achieving desired synergies.

In addition, we incur costs associated with potential acquisitions that we pursue and are not consummated, such as litigation or other dispute resolutions expenses associated with termination of transaction agreements.

We also may need to deploy resources to ensure target and acquired PACE centers are operating in compliance with regulatory and contractual requirements, as well as any corrective action plans.

Any failure to select suitable opportunities at fair prices, conduct appropriate due diligence, acquire, and successfully integrate the acquired center into our operations, particularly centers operating in new geographic markets, could materially and adversely impact our growth strategies, financial condition or results of operations.

Further, laws governing the review and approval of healthcare transactions could limit our ability to successfully complete acquisitions.

Several states, including California, New Mexico, and Colorado have adopted laws focused on competition, quality, access, and cost that either authorize state agencies to review and approve certain healthcare transactions, or require notice prior to certain healthcare transactions, such as in California (requiring notice to the office of Health Care Affordability with certain transactions referred to their attorney general for further review) or New Mexico (requiring approval for certain transactions involving acquisitions and other changes in control of hospitals, including formation of a partnership or joint venture that results in an indirect change).

Many other states, including Pennsylvania where several bills have been proposed, are currently voting on or considering similar legislation.

Several states, including California, New Mexico, and Colorado have adopted laws focused on competition, quality, access, and cost that either authorize state agencies to review and approve certain healthcare transactions, or require notice prior to certain healthcare transactions, such as in California (requiring notice to the Office of Health Care Affordability with certain transactions referred to their attorney general for further review) or in New Mexico (requiring approval for certain transactions involving acquisitions and other changes in control, including formation of a partnership or joint venture that results in an indirect change in control).

Many other states, including Pennsylvania have been considering similar legislation.

Moreover, state attorneys general, including in California, hold approval authority with respect to certain other healthcare transactions.

These notices and approvals typically require a substantial amount of information, including supporting documentation.

While certain of these proposed bills and restrictions are targeted at physician and dental practice management, they reflect a broader trend of increased regulatory scrutiny of healthcare transactions, which could negatively affect our ability to grow our business.

These transactions may also cause us to significantly increase our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition or investment, issue common stock that would dilute our current shareholders’ percentage ownership or incur asset write-offs and restructuring costs and other related expenses that could have a material adverse impact on our operating results.

Acquisitions, joint ventures and strategic investments also involve numerous other risks, including potential exposure to assumed liabilities, as well as undetected internal control, regulatory or other issues, or unanticipated additional costs.

While certain of these proposed bills and codified restrictions target physician and dental practice management, they reflect a broader trend of increased regulatory scrutiny of healthcare transactions, which could negatively affect our ability to grow our business and our ability to successfully complete future transactions.

Beyond state laws requiring regulatory notice or review of transactions, other state laws or policies may constrain our ability to successfully complete acquisitions, joint ventures and other strategic partnerships.

For example, effective November 20, 2025, California adopted a two-year pause to the PACE application process, expiring on November 19, 2027.

During the application pause period, California will not accept applications for new PACE organizations and existing PACE organization service area expansions.

The application pause will constrain our ability to open new PACE centers and expand the reach of our existing PACE centers in California, limiting our ability to grow our business in the state.

While the application pause is set to expire in November 2027, it is possible that California will extend the application pause beyond that period.

These proposed transactions may also have material impacts on our operating results if we significantly increase our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition or investment, dilute our current shareholders’ percentage ownership by issuing common stock to a transaction counterparty, or incur asset write-offs, restructuring costs and other expenses associated with such transactions.

Acquisitions, joint ventures and

strategic investments also involve numerous other risks, including potential exposure to assumed liabilities, as well as undetected internal control, regulatory or other issues, or unanticipated additional costs.

If we are unable to attract new participants and retain existing participants, our revenue growth will be adversely affected.

5 unchanged sentences

Additionally, participant enrollment for PACE is ongoing each month and requires states to verify eligibility, a process which can result in delays in enrollment.

We have experienced, and continue to experience, an increase in gaps of

eligibility for both new enrollments and Medicaid redetermination applications due to processing delays and other enrollment and redetermination procedures that vary by State and county.

We have experienced, and continue to experience, an increase in gaps of eligibility for both new enrollments and Medicaid redetermination applications due to processing delays and other enrollment and redetermination procedures that vary by State and county.

While participants continue to receive care and remain enrolled with us during the redetermination process, the effect of such delays temporarily halts Medicaid revenue related to any closed application and simultaneously increases our risk of revenue recovery.

The OBBBA, signed into law on July 4, 2025, generally requires redetermination to occur at least every 6 months instead of annually.

As a result, enrollment delays may increase, due to insufficient staffing to handle the higher volume of work, and, if the additional redetermination requirement applies to our participants, the risk of revenue recovery may increase for those of our participants subject to such additional redetermination.

In the State of California, processing delays resulted in lower estimated per member, per month (“PMPM”) amounts during fiscal year 2025, which triggered a negative adjustment for prior PMPM estimates and also reduced the reimbursements we received from the State.

Even though our results of operations have not suffered a material adverse effect from these delays, there is no guarantee that further delays may not adversely impact our results.

A shortage of clinicians combined with an aging population creates increased demand on the limited number of existing residential facilities.

As a result, the access of our participants to such facilities is uncertain, as such facilities may prioritize private payors or may be unable to accept participants at pre-determined rates.

If we are unable to access residential facilities, we could be unable to retain existing participants who require such facilities.

Our overall business results have been, and we expect will continue to be, impacted by ongoing macroeconomic and industry-related challenges, including labor shortages, labor competition, inflation, tariffs and trade disputes.

Macroeconomic and industry challenges, including uncertainty surrounding trade tensions and supply chain disruptions, labor shortages, labor competition and high inflation, have impacted and we expect will continue to impact our business operations and our overall business results.

The healthcare sector continues to experience workforce shortages, particularly in geriatrics, primary care and direct care roles, as well as a complex set of challenges in hiring additional professionals due to higher demand for healthcare services and systemic challenges related to workforce training and the pipeline of qualified professionals.

We compete with other healthcare providers, primarily hospitals and other centers, and home health care providers in attracting physicians, nurses and medical staff to support our centers, and recruiting and retaining qualified management and support personnel responsible for the daily operations of each of our centers.

The Reconciliation Act, signed into law on July 4, 2025, generally requires redetermination to occur at least every 6 months instead of annually.

As a result, enrollment delays may increase due to insufficient staffing to handle the higher volume of work.

Our overall business results have been, and we expect will continue to be, impacted by ongoing macroeconomic, geopolitical and industry-related challenges, including labor shortages, labor competition, inflation, and supply chain disruption as a result of tariffs and trade disputes.

Macroeconomic and industry challenges, including labor shortages, labor competition, high inflation, and supply chain disruptions as a result of tariffs and trade disputes have impacted and we expect will continue to impact our business operations and our overall business results.

The healthcare sector continues to experience workforce shortages, particularly in geriatrics, primary care and direct care roles, as well as a complex set of challenges in hiring additional professionals due to higher demand for healthcare services and the pipeline of qualified professionals, and with respect to direct care roles, changes in federal immigration policy and enforcement.

We compete with other healthcare providers, primarily hospitals, other PACE organizations, skilled nursing facilities, Medicare Advantage plans, and other risk-bearing primary care, and other home health care providers in attracting, recruiting and retaining physicians, nurses, medical staff and other qualified management and support personnel to support our centers and their daily operations.

Furthermore, high inflation has increased the cost of living, and consequently, wage pressure for healthcare professionals, which has contributed to an increasingly competitive labor market.

Increased wage pressure for healthcare professionals is also impacted by certain laws and regulations, such as the adoption of California Senate Bill No.

Increased wage pressure for healthcare professionals has also been impacted by certain laws and regulations, such as the adoption of California Senate Bill No.

525 (“SB 525”), which raised minimum wage for many California healthcare workers and impacted many of our contractors and other third-party providers.

As a result of competition generated by SB 525 and other California market conditions, we received rate increases from third party vendors, including those providing home health services and care partner services, increasing our cost of care in California.

We also increased our wages for impacted healthcare workers and other comparable market positions in the California market.

Because the vast majority of our revenue consists of prospective monthly capitated, or fixed, payments per participant, our ability to pass along increased costs is limited.

In particular, if labor costs rise at an annual rate greater than our net annual consumer price index basket update from Medicare, our results of operations and cash flows will likely be adversely affected.

If labor market conditions disrupt our ability to recruit healthcare professionals, we may not be able to execute our growth plan and grow capacity in our existing centers or open de novo centers or we may have to do so at costs higher than originally budgeted, which, in turn, could increase our capital needs during a time of high interest rates and when conditions in the credit and capital markets are volatile.

As a result of competition generated by SB 525 and other California market conditions, we have received rate increases from third party vendors, including those providing home health services and care partner services, increasing our cost of care in California in fiscal year 2026.

We also increased our wages in fiscal year 2026 for impacted healthcare workers and other comparable market positions in the California market.

Because substantially all of our revenue consists of prospective monthly capitated, or fixed, payments per participant, our ability to pass along increased costs is limited.

In particular, if labor costs rise at an annual rate greater than the annual increases in our Medicare and Medicaid capitation rates, our results of operations and cash flows will likely be adversely affected.

If labor market conditions disrupt our ability to attract, recruit and retain healthcare professionals, we may not be able to execute our growth plan and grow capacity in our existing centers or open de novo centers or we may have to do so at costs higher than originally budgeted, which, in turn, could increase our capital needs during a time of elevated interest rates and when conditions in the credit and capital markets are volatile.

Cost of care and related cost per participant increased for fiscal year 2026 compared to 2025, partially as a result of higher wage rates.

3 unchanged sentences

We rely on both domestic and international suppliers for medical equipment and supplies, including pharmaceuticals used in our business.

tariff announcements, retaliatory measures by other countries, and significant uncertainty surrounding trade tensions may result in higher prices for medical and other supplies and lead to supply chain disruptions and additional costs.

tariffs, retaliatory measures by other countries, significant uncertainty surrounding trade tensions and military conflicts, in particular the conflict in the Middle East, may result in higher prices for medical and other supplies and lead to supply chain disruptions and additional costs.

Factors arising from supply chain challenges such as raw material shortages, longer lead times, and increased transportation expenses may affect our ability to grow our business effectively and may pose risks to our ability to acquire essential medical supplies in a timely and efficient manner.

The degree to which tariffs affect the global supply

chain and our business will depend on their timing, duration and magnitude, which may be changed at any time and with little or no prior notice.

The degree to which tariffs and the conflict in the Middle East may affect the global supply chain and our business will depend on the timing, duration and magnitude of these events, which may change at any time and with little or no prior notice.

Additionally, the healthcare industry is subject to shifting political priorities and initiatives.

As our stakeholders have evolving, varied, and sometimes conflicting expectations regarding political positions, we may experience adverse reactions from some of our stakeholders for positions we take on, and advocacy for, Medicare and Medicaid in the future.

During periods of high unemployment, governmental entities often experience budget deficits as a result of increased costs and lower than expected tax collections.

These budget deficits at federal, state and local government entities have decreased, and may continue to decrease, spending for health and human service programs, including Medicare, Medicaid, PACE and similar programs, which represent nearly all of the payor sources for our centers and which may have a material effect on our results of operations and financial condition.

To date, we believe that macroeconomic and industry conditions, including labor shortages and inflation, have not had a material effect on our operating results.

However, there can be no assurance that continued challenges will not have an adverse impact on our operating results and financial condition.

We have faced and continue to face inspections, reviews, audits and investigations under federal and state government programs and contracts.

These audits have required and may in the future require corrective actions and have resulted in adverse findings that have negatively affected and continue to affect our business, including our results of operations, liquidity, financial condition and reputation.

As a result of our PACE contracts with CMS and state government agencies, state licenses, and participation in Medicaid, we are regularly subject to, and will continue to be subject to, various routine and non-routine governmental inspections, reviews, audits, requests for information and investigations to verify our compliance with requirements of these programs and applicable laws and regulations, assess the quality of the services we are providing to our participants, and evaluate the accuracy of the risk adjustment data we have submitted to the government.

Starting in 2021, we underwent federal and state audits in our centers in California, Colorado and New Mexico.

Based on deficiencies detected in the audits, CMS and regulatory authorities in the states of California and Colorado suspended new enrollments at our Sacramento center and our centers in Colorado.

We were released from the enrollment sanctions in 2023.

As previously disclosed, in October 2023, CMS and the DHCS conducted a joint routine audit of our Sacramento center and DHCS is currently conducting a medical review of our San Bernardino center, which commenced in March 2024.

In response to both of these matters, DHCS suspended its state-required attestations for our planned de novo centers in California.

There is no guarantee that such attestations will be reinstated or that similar situations will not occur in the future.

Audits have and will continue to increase our regulatory compliance costs and have required and may require further change to our business practices, which could negatively impact our participant and revenue growth.

Managing audits, even if we achieve favorable outcomes, is costly, time-consuming and diverts management’s attention from our business.

Our centers will continue to be subject to federal and state audits, and there is no guarantee that future audits will not find deficiencies similar to, or different from, the ones found in connection with prior audits.

In general, inspections, reviews, audits, requests for information or investigations with adverse findings, and in particular the audits described above, have resulted in and may further result in:

• temporary or permanent enrollment sanctions in the affected center(s), as was the case with our Sacramento, California center and our centers in the State of Colorado in 2021;

• refunding amounts we have been paid by the government;

• state or federal agencies imposing corrective action plans, fines, penalties, training, policies and procedures, monitoring, and other requirements;

• temporary suspension of payments;

• debarment or exclusion from participation in federal healthcare programs;

• self-disclosure of violations to applicable regulatory authorities;

• damage to our reputation;

• the revocation of a center’s license or suspension of state attestations to open de novo centers, such as the case with our Downey and Bakersfield, California centers;

• loss of certain rights under, or termination of, our contracts with government payors.

Any of the results noted above have had and could have material adverse effects on our business and operating results.

Furthermore, the legal, document production and other costs associated with complying with these inspections, reviews, audits, requests for information or investigations are significant.

If we are unable to effectively remediate the deficiencies raised by any audits, implement corrective action plans, or otherwise satisfy the regulators’ concerns, we could be subject to new sanctions, and our business, financial results and operations could be adversely impacted.

We are subject to legal proceedings, enforcement actions and litigation, malpractice and privacy disputes, which are costly to defend and could materially harm our business and results of operations.

We are party to lawsuits and legal proceedings from participants, employees, or other third parties for various actions.

These matters are often expensive and disruptive to our business operations.

We face and may in the future face allegations, lawsuits, including class actions, and regulatory inquiries, requests for information, audits and investigations regarding care and services provided to participants, the FCA, data privacy, security, labor and employment, securities laws, consumer protection or intellectual property.

We also have faced and may in the future face allegations or litigation related to our potential and completed acquisitions, securities issuances or business practices, including contract claims and public disclosures about our business.

We are currently party to a stockholder lawsuit asserting derivative claims for breach of fiduciary duty generally relating to alleged failures by the defendants to take remedial actions to address the matters that resulted in sanctions by CMS at certain of our centers and alleged misstatements in our public filings relating to those matters.

Additionally, we are currently a party to an arbitration proceeding initiated by our former pharmacy services vendor asserting claims for breach of contract and breach of confidentiality, non-renewal and termination of its services agreements.

We are currently unable to predict the outcome of these matters.

See Part I, Item 3 “Legal Proceedings” for more information.

Litigation and regulatory proceedings are protracted and expensive, and the results are difficult to predict.

Certain of these matters include claims for substantial or indeterminate amounts of damages and may include claims for injunctive relief.

Additionally, our litigation costs are and will continue to be significant.

Adverse outcomes with respect to the legal proceedings described above or other litigation may result in significant settlement costs or judgments, penalties, fines and sanctions.

For example, in June 2025, the Company and the other defendants entered into a settlement agreement to resolve the securities class action lawsuit with plaintiffs who alleged violations of the Securities Act and the Exchange Act in exchange for a payment by the Company of $27.0 million, of which— after adjusting for the settlement amounts to be paid directly by the Company's insurers—the Company’s share was $10.1 million.

Managing legal proceedings, regulatory inquiries, litigation and audits, even if we achieve favorable outcomes, is costly, time-consuming and diverts management’s attention from our business.

The results of regulatory proceedings, investigations, inquiries, litigation, claims, and audits cannot be predicted with certainty, and determining reserves for pending litigation and other legal, regulatory and audit matters require significant judgment and assumptions.

There can be no assurance that our expectations will prove correct, and even if these matters are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, cause harm to our reputation, business, financial condition, results of operations and the market price of our common stock.

We are also subject to lawsuits under the FCA and comparable state laws for submitting allegedly fraudulent, inadequately supported or otherwise inappropriate bills for services to the Medicare and Medicaid programs.

These lawsuits, which may be initiated by government authorities as well as private party relators, can involve significant monetary damages, fines, attorney fees and the award of bounties to private plaintiffs who successfully bring these suits, as well as to the government programs.

In recent years, government oversight and law enforcement have become increasingly active and aggressive in investigating and taking legal action against potential healthcare fraud and abuse.

As previously disclosed, in July 2021, the Company received a civil investigative demand from the Attorney General for the State of Colorado under the Colorado Medicaid False Claims Act.

We continue to fully cooperate with the Attorney General.

In February 2022, the Company received a civil investigative demand from the Department of Justice (“DOJ”) under the Federal False Claims Act on similar subject matter.

In October 2024, the Company received a civil investigative demand from the DOJ under the Federal False Claims Act on similar subject matter as the 2022 investigation.

The Company is fully cooperating with the DOJ.

We are currently unable to predict the outcome of these investigations.

See Part I, Item 3 “Legal Proceedings” for more information.

Furthermore, our business exposes us to potential medical malpractice, professional negligence or other related actions or claims that are inherent in the provision of healthcare services.

These claims, whether or not they have merit, could cause us to incur substantial costs, and could place a significant strain on our financial resources, divert the attention of management from our core business, harm our reputation and adversely affect our ability to attract and retain participants, any of which could have a material adverse effect on our business, financial condition and results of operations.

Although we maintain third-party professional liability insurance coverage, certain claims against us may exceed the coverage limits of our insurance policies, such as the securities class action lawsuit discussed above.

Even if any professional liability loss is covered by an insurance policy, these policies typically have substantial deductibles for which we are responsible.

Professional liability claims in excess of applicable insurance coverage could have a material adverse effect on our business, financial condition and results of operations.

In addition, any professional liability claim brought against us, regardless of merit, could result in an increase of our professional liability insurance premiums.

Insurance coverage varies in cost and can be difficult to obtain, and we cannot guarantee that we will be able to obtain insurance coverage in the future on terms acceptable to us or at all.

If our costs of insurance and claims increase, then our earnings could decline.

Governmental payors at the federal, state and local levels continue to face structural budget deficits and fiscal pressures driven by rising operational outlays, healthcare program expansions, and shifting revenue collections.

These ongoing budget constraints have decreased, and may continue to decrease, spending or reimbursement rates for health and human service programs, including Medicare, Medicaid, PACE and similar programs.

Because these programs represent nearly all of the payor sources for our centers, any prolonged funding reductions may have a material effect on our results of operations and financial condition.

While macroeconomic and industry conditions, including labor shortages and inflation, have increased our cost of care to date, we believe that these conditions have not had a material effect on our overall operating results to date;

however, there can be no assurance that continued challenges will not have an adverse impact on our operating results and financial condition in the future.

Under our PACE contracts, we assume all of the risk that the cost of providing services will exceed our compensation.

Approximately 99.8% of our revenue for each of the years ended June 30, 2025 and 2024, was derived from capitation agreements with government payors in which we receive fixed PMPM fees.

Nearly all of our revenue for the years ended June 30, 2026 and 2025, was derived from capitation agreements with government payors in which we receive fixed PMPM fees.

While there are variations specific to each agreement, we generally contract with government payors to receive a fixed PMPM fee to provide or manage all healthcare services a participant may require while assuming financial responsibility for the totality of our participants’ healthcare expenses.

6 unchanged sentences

Historically, our medical costs and expenses as a percentage of revenue have fluctuated.

Factors that may cause medical expenses to exceed estimates include:

Factors that have caused and may continue to cause medical expenses to exceed estimates include:

• the health status of participants requiring higher levels of care, such as nursing home care, or higher incidents of hospitalization;

2 unchanged sentences

transplants);

• an increase in the cost of healthcare services and supplies, whether as a result of inflation, wage increases, purchases of vaccines and personal protective equipment as a result of a pandemic or epidemic, other health emergencies, or otherwise;

• an increase in the cost of healthcare services and supplies, whether as a result of inflation, wage increases, pandemics or epidemics, other health emergencies, or otherwise;

• emergence of new high-cost medications to treat conditions that are common in our population, such as new treatments for Alzheimer’s Dementia;

3 unchanged sentences

• contractual or claims disputes with providers, hospitals or other service providers;

• the occurrence of catastrophes, health emergencies, including epidemics or pandemics or acts of terrorism;

• the occurrence of catastrophes;

• the reduction of government payor payments.

We have experienced, and expect to continue experiencing, increased costs and expenditures in the future.

In fiscal year 2025, while we continued several initiatives intended to lower certain of our costs, we also made, and expect to continue making, significant investments in growing and transforming our business, including through the implementation of Company-wide transformation initiatives (focused on managing cost trends, operational excellence and high quality care for participants) increasing our participant base, building capabilities to increase our sophistication as a payor to drive clinical value, expanding our operations through acquisitions, hiring additional employees for growing or new centers, and introducing or improving technology.

As a result of these increased expenditures, we may not succeed in increasing our revenue sufficiently to improve our profit margins.

In fiscal year 2026, while we continued several initiatives intended to lower certain of our costs, we also continued to make significant investments in growing and transforming our business, including through the implementation of Company-wide transformation initiatives (focused on managing cost trends, operational excellence and high quality care for participants) increasing our participant base, building capabilities to increase our sophistication as a payor to drive clinical value, expanding our operations through acquisitions, hiring additional employees for growing or new centers, and introducing or improving technology.

As a result of these increased expenditures, our profit margins may decrease.

Our operating expenses have increased, and we expect them to continue to increase, over the next several years as we continue to hire additional personnel, expand our operations and infrastructure, reimagine key operational areas through technology, and continue to provide services to an increasing number of participants in furtherance of our clinical and operational value initiatives.

As we expect the rate environment for fiscal year 2027 to be more constrained than in recent years, to help manage medical costs and protect our profit margins, we are placing increased reliance on such initiatives, including deployment of artificial intelligence (“AI”) enabled scheduling and efforts to reduce unwarranted variation in provider practice patterns.

If we are not able to execute or realize the benefits of our clinical and operational value initiatives, or if they otherwise prove insufficient to offset a more constrained rate environment, our profit margins could decrease, our operating loss could increase and we may not gain the anticipated efficiencies from such initiatives.

In addition to the expected costs to grow our business, we also expect to continue to incur compliance costs, as a result of audits and maintaining high quality of care across our centers, as well as additional legal, accounting and other expenses as we continue to operate as a public company.

These investments may be more costly than we expect, and if we do not achieve the benefits anticipated from these investments, or if the realization of these benefits is delayed, our profitability could decline.

If our growth rate were to decline significantly or become negative, it could adversely affect our financial condition and results of operations.

We finance our operations principally from revenue from our participant services and the incurrence of indebtedness.

1 unchanged sentence

We have encountered, and will continue to encounter, risks and difficulties frequently experienced by growing companies in rapidly changing and highly regulated industries, including increasing expenses as we continue to grow our business.

If we are not able to execute or realize the benefits of our clinical and operational value initiatives, our operating loss could continue to decline and we may not gain anticipated integration and efficiencies.

If our growth rate were to decline significantly or become negative, it could adversely affect our financial condition and results of operations.

If we are not able to maintain positive cash flow in the long term, we may require additional financing, which may not be available on favorable terms or at all and/or which would be dilutive to our shareholders.

If we are unable to successfully address these risks and challenges as we encounter them, our business, results of operations and financial condition would be adversely affected.

Accordingly, we may not be able to be profitable or improve our income in the future, which could negatively impact the value of our common stock.

Our revenues and operations are dependent upon a limited number of government payors, particularly Medicare and Medicaid.

Our dependence on Medicare and Medicaid exposes us to risks from government funding reductions, legislative changes including the Reconciliation Act, and federal and state budgetary pressures.

Our operations are dependent on a limited number of government payors, particularly Medicare and Medicaid, with whom we directly contract to provide services to participants.

We generally manage our contracts on a state-by-state basis, entering into a separate contract in each state.

When aggregating the revenue associated with Medicare and Medicaid by state, Colorado, California and Virginia accounted for a total of approximately 86.4% and 84.3% of our capitation revenue for the years ended June 30, 2025 and 2024, respectively.

When aggregating the revenue associated with Medicare and Medicaid by state, Colorado and California accounted for a total of 70.2% and 70.1% of our capitation revenue for the fiscal years ended June 30, 2026 and 2025, respectively.

Based on our current business structure and market conditions, we expect that the majority of our revenues will continue to be derived from a limited number of key government payors.

1 unchanged sentence

Government-funded healthcare programs in the states in which we operate face a number of risks, including higher than expected healthcare costs and lack of predictability of tax basis and budget needs.

As the states respond to market dynamics and financial pressures, and as government payors make strategic budgetary decisions in respect of the programs in which they participate, certain government payors, including CMS and state Medicaid agencies, may seek to renegotiate or terminate their agreements with us.

Any reduction in the budgetary appropriations for our services, whether due to fiscal constraints from a recession or economic downturn, emergency situations such as pandemics, changes in policy or otherwise, could result in a reduction in our capitated fee payments, changes to the scope of services, or even the loss of contracts, any of which could negatively impact our revenues, business and prospects.

The Trump Administration has called for a reduction in expenditures across the government, including at HHS, the FDA, the National Institutes of Health, CMS and related agencies.

Implementation of efficiency directives, such as those

issued by the Department of Government Efficiency (DOGE), and actions presently directed by executive order could decrease federal spending related to healthcare and create policy changes that could harm our business.

These actions may, for example, include directives to reduce agency workforce and rescinding a Biden Administration executive order tasking the Center for Medicare and Medicaid Innovation (CMMI) to consider new payment and healthcare models to limit drug spending.

Further, the OBBBA, makes several changes that impact Medicare, Medicaid and PACE providers.

OBBBA mandates significant reductions in federal Medicaid spending, with the Congressional Budget Office estimating a decrease of $1 trillion over the next decade.

The OBBBA also introduces new work requirements for Medicaid recipients aged 19 to 64, necessitating at least 80 hours per month of work, education, or volunteer activities, unless they qualify for certain exemptions.

The OBBBA also narrows Medicaid eligibility for qualified immigrants.

As the states respond to regulatory changes, market dynamics and financial pressures, and as government payors make strategic budgetary decisions in respect of the programs in which they participate, certain government payors, including CMS and state Medicaid agencies, may seek to renegotiate or terminate their agreements with us.

Any reduction in the budgetary appropriations for our services, whether due to fiscal constraints from changes in policy, a recession or economic downturn, emergency situations such as pandemics, or otherwise, could result in a reduction in our capitated fee payments, changes to the scope of services, or even the loss of contracts, any of which could negatively impact our revenues, business and prospects.

The Trump Administration has implemented a series of measures to reduce expenditures and streamline operations across the federal government, including at HHS, the FDA, the National Institutes of Health and CMS.

Although temporary commission of the Department of Government Efficiency (DOGE) formally concluded in July 2026, its efficiency directives, permanent personnel changes, and ongoing executive actions continue to reduce federal spending related to healthcare.

Furthermore, the administration has reshaped the Center for Medicare and Medicaid Innovation (CMMI) to focus on cost reduction strategies and program integrity initiatives, such as the CMS “Comprehensive Regulations to Uncover Suspicious Healthcare” (CRUSH) initiative launched in 2026.

These spending cuts, heightened audit environments and shifting reimbursement structures could significantly decrease federal funding related to healthcare, modify our compliance landscape, and create policy changes that could materially and adversely harm our business operations, financial condition, and results of operations.

Further, the Reconciliation Act, made several changes that impact Medicare, Medicaid and PACE providers.

The Reconciliation Act mandated significant reductions in federal Medicaid spending, with the Congressional Budget Office estimating a decrease of $1 trillion over the next decade.

The Reconciliation Act also introduced new work requirements for Medicaid recipients aged 19 to 64, which are slated for nationwide implementation on January 1, 2027, necessitating at least 80 hours per month of work, education, or volunteer activities, unless they qualify for certain exemptions.

The Reconciliation Act also narrowed Medicaid eligibility for qualified immigrants.

States will be required to conduct eligibility verifications of Medicaid enrollees in the expansion population every six months (unless otherwise exempt), increasing from the previous annual requirement.

These changes may lead to decreased Medicaid enrollment among existing and prospective PACE participants, potentially reducing our funding and decreasing margins.

OBBBA also introduces cost-sharing measures, requiring Medicaid beneficiaries with incomes between 100% and 138% of the federal poverty level to pay up to $35 per service for certain healthcare services.

As a result, eligible participants could be deterred from enrolling in or continuing enrollment with PACE programs, possibly impacting our ability to retain or increase our participant base.

With the federal funding cuts, and states being prohibited from increasing provider taxes to finance their share of Medicaid spending, states may also face budgetary pressures.

The Reconciliation Act also introduced cost-sharing measures, requiring Medicaid beneficiaries with incomes between 100% and 138% of the federal poverty level to pay up to $35 per service for certain healthcare services.

Though the statutory implementation date for these co-pays is deferred until October 1, 2028, states are already structuring their multi-year budgets around these anticipated savings.

As a result of these Reconciliation Act mandates, eligible participants could be deterred from enrolling in or continuing enrollment with PACE programs, possibly impacting our ability to retain or increase our participant base.

With the federal funding cuts, and states being prohibited from increasing provider taxes to finance their share of Medicaid spending, states are also facing budgetary pressures.

These budgetary pressures may potentially lead to reductions in certain optional Medicaid benefits, reductions in the workforce for the government entities that oversee and administer Medicaid and PACE, causing delays, and downward pressure on rates, including our capitated fee payments.

2 unchanged sentences

Failure to adapt promptly could result in regulatory penalties, sanctions, or loss of funding.

Until we know the full scope of the impact of the OBBBA and other policy changes made by the Trump Administration, whether those policy changes are challenged and subsequently upheld by the court system and how those changes impact our business and the business of our competitors over the long term, we will not know the extent of any direct or indirect impact on us.

Until we know the full operational reality of these multi-phase Reconciliation Act rollouts, continuous litigation appeals, and down-stream state budgetary adjustments are finalized, we will not know the extent of any direct or indirect impact on us.

In addition, government payors may generally adjust certain terms of our agreements with them from time to time and may terminate their contracts with us upon the occurrence of certain events.

1 unchanged sentence

Government payors, such as CMS and state Medicaid agencies, may also exercise their regulatory authority to terminate, suspend or cancel our contracts, in whole or in part, for cause in the event of our noncompliance with applicable statutory, regulatory, or contractual requirements, or if we are debarred or suspended from providing services by state or federal government authorities.

CMS, as the federal agency responsible for oversight of Medicare and PACE programs, may also impose regulatory sanctions for noncompliance with federal requirements, including but not limited to the suspension of participant enrollment, civil monetary penalties, or contractual termination.

enrollment, civil monetary penalties, or contractual termination.

The imposition of such sanctions has in the past affected and could in the future adversely affect our operating results and our ability to pursue our growth strategies.

2 unchanged sentences

See also Item 1A.

Risk Factors, “Risks Related to Our Business-We conduct a significant percentage of our operations in the State of Colorado and, as a result, we are particularly susceptible to any reduction in budget appropriations for our services or any other adverse developments in that state.”

Reductions in PACE reimbursement rates or changes in the rules governing PACE programs could have a material adverse effect on our financial condition and results of operations.

We receive nearly all of our revenue through the PACE program, which accounted for 99.8% of our revenue for each of the years ended June 30, 2025 and 2024.

As a result, our operations are dependent on government funding levels for PACE programs.

Any changes that limit or reduce general PACE funding, such as reductions in or limitations of reimbursement amounts or rates under programs, reductions in funding of programs, expansion of benefits, services or treatments under programs without adequate funding, could have a material adverse effect on our business, results of operations, financial condition and cash flows.

The PACE programs and their respective reimbursement rates, payment structures and rules are subject to frequent change.

These include statutory and regulatory changes, rate adjustments (including retroactive adjustments), administrative or executive orders and government funding restrictions, all of which may materially adversely affect the PACE rates at which we are compensated for our services.

Risk Factors, “Risks Related to Our Business-We conduct a significant percentage of our operations in the States of California and Colorado and, as a result, we are particularly susceptible to any reduction in budget appropriations for our services or any other adverse developments in that state.”

Reductions in PACE reimbursement rates, changes in risk adjustment methodologies, or changes in the rules governing PACE programs could have a material adverse effect on our financial condition and results of operations.

Nearly all of our revenue is derived through the PACE program.

As a result, our operations are highly dependent on federal and state government funding levels and reimbursement methodologies applicable to PACE organizations.

Any changes that limit or reduce general PACE funding, such as reductions in or limitations of reimbursement amounts or rates under programs, changes in payment methodologies, reductions in funding of programs or expansion of benefits, services or treatments under programs without adequate funding, could have a material adverse effect on our business, results of operations, financial condition and cash flows.

The PACE programs and their respective reimbursement methodologies are subject to frequent statutory, regulatory and administrative changes.

These changes may include modifications to payment rates, benchmark calculations, risk adjustment methodologies, risk score reconciliations, data submission requirements, administrative guidance, executive orders and government funding restrictions, all of which may materially adversely affect the PACE rates at which we are compensated for our services.

Budget pressures can lead federal and state governments to reduce or place limits on reimbursement rates and payment structures under PACE.

For example, the budget constraints caused by recent federal funding cuts and impact of the OBBBA may lead federal and state governments to reduce or limit reimbursement amounts or rates under the PACE program.

For example, the budget constraints caused by recent federal funding cuts and impact of the Reconciliation Act may lead federal and state governments to reduce or limit reimbursement amounts or rates under the PACE program.

Implementation of these and other types of measures has in the past and could in the future result in reductions in our revenue and operating margins, the extent of which would depend on the specific measures implemented.

Legislation enacted in 2011 requires CMS to sequester or reduce all Medicare payments, including payments to PACE organizations, by two percent per year beginning on April 1, 2013, and this sequestration has been extended through fiscal year 2032 for Medicare benefit payments.

We cannot predict what other deficit reduction, other payment reduction or budget enforcement initiatives may be proposed by Congress, which could impact our business, including whether Congress will attempt to increase, restructure or suspend sequestration.

1 unchanged sentence

Because nearly all of our revenue is through the PACE program, any negative changes to the PACE benchmark payment rates could have a material adverse effect on our business, results of operations, financial condition and cash flows.

In addition, our PACE revenues may become volatile in the future, which could have a material adverse impact on our business, results of operations, financial condition and cash flows.

Reductions in reimbursement rates could have a material, adverse effect on our financial condition and results of operations or even result in rates that are insufficient to cover our operating expenses.

In addition, CMS has begun a multi-year transition from the legacy PACE-specific 2020 CMS-Hierarchical Condition Category (“ CMS-HCC ”) (V22) risk adjustment model to the Medicare Advantage 2024 CMS-HCC (V28) risk adjustment model.

Effective January 1, 2026, CMS began phasing in the V28 model with full implementation expected in calendar year 2028.

The V28 model significantly revises the clinical conditions, coefficients, and hierarchies used to determine participant risk scores and places greater emphasis on coding specificity and diagnosis documentation.

As a result, the transition may reduce risk scores for many PACE participants relative to the legacy model and could result in lower Medicare revenue growth than we have historically experienced.

Reductions in reimbursement rates or adverse changes in payment methodologies could have a material, adverse effect on our financial condition and results of operations or even result in rates that are insufficient to cover our operating expenses.

For example, our external provider costs are driven by rates set by Medicare and Medicaid, which are outside of our control and may be negotiated in a manner unfavorable to us.

Additionally, any delay or default by state governments in funding our capitated payments could materially and adversely affect our business, financial condition and results of operations.

Recent legislative, judicial and executive efforts to enact further healthcare reform legislation have caused the future state of reforms under the ACA and many core aspects of the current U.S.

healthcare system to be unclear.

While specific changes and their timing are not yet apparent, enacted reforms and future legislative, regulatory, judicial, or executive changes, particularly any changes to the PACE program, could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Our records and submissions to government payors may contain inaccurate or unsupportable information regarding risk adjustment scores of participants, which could cause us to overstate or understate our revenue and subject us to repayment obligations or penalties.

The claims and encounter records that we submit to government payors involve data that support the RAF scores attributable to participants.

These RAF scores determine the payment we are entitled for the provision of medical care to such participants.

The data submitted to CMS is based on diagnosis codes and medical charts that our employed, contracted and noncontracted providers identify, record and prepare.

Any issues with recording and documenting identified medical conditions could adversely impact Medicare RAF scores and our resulting revenue for future periods.

CMS periodically audits PACE organizations’ risk adjustment submissions.

The submission of inaccurate, incomplete or erroneous data could result in inaccurate revenue and risk adjustment payments, which may be subject to correction or retroactive adjustment in later periods.

This corrected or adjusted information may be reflected in financial statements for periods subsequent to the period in which the revenue was recorded.

We could be required to refund a portion of the revenue that we received, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Historically, these true-up payments typically occur between May and August, but the timing of these payments is determined by CMS, and we have neither visibility nor control over the timing of such payments.

From time to time, we may experience reconciliation issues as government payors modify or adopt new systems.

If CMS seeks repayment from us for payment adjustments as a result of its audits, we could also be subject to liability for penalties for inaccurate or unsupportable RAF scores provided by us or our providers.

In addition, we could be liable for penalties to the federal government under the FCA, which may include per claim penalties, plus up to three times the amount of damages caused by each false claim, which can be as much as the amounts received directly or indirectly from the government for each such false claim.

As of January 15, 2025, the minimum FCA penalty increased from $13,946 to $14,308 per claim.

The maximum penalty has increased from $27,894 to $28,619 per claim.

There is a high potential for substantial penalties in connection with any alleged FCA violations.

Elements of the risk adjustment mechanism continue to be challenged, reevaluated and revised by the U.S.

DOJ, the OIG and CMS.

On February 1, 2023, CMS published the Medicare Advantage RADV Program Final Rule, effective April 3, 2023, which allows CMS to extrapolate Risk Adjustment Data Validation (“RADV”) audit findings beginning with payment year 2018.

On May 21, 2025, CMS announced a significant expansion of its RADV auditing:

all eligible MA plans will now be audited annually, rather than a limited subset, and CMS intends to complete its backlog of RADV audits for payment years 2018 to 2024 by early 2026.

Each audit will also review a larger sample of records, increasing the administrative burden and potential for recoupment.

If CMS recovers overpayments from MA plans, those plans may seek to recover payments from us that the plans believe are attributable to risk adjustment data.

These developments generally increase the risk of payment recoupment and compliance exposure for organizations participating in Medicare Advantage arrangements, like us.

There can be no assurance that a PACE organization, including us, will not be randomly selected or targeted for review by CMS or that the outcome of such a review will not result in a material adjustment in our revenue and profitability, even if the information we submitted to CMS is accurate and supportable.

Substantial changes in the risk adjustment mechanism, including changes that result from enforcement or audit actions, could materially affect our capitated reimbursement.

For example, CMS released an updated PACE Medicaid Capitation Rate Setting Guide, effective January 1, 2025, which clarifies and expands requirements for state development and documentation of PACE Medicaid capitation rates.

Under this new guidance, states must provide more detailed supporting data and methodologies when submitting proposed rates to CMS for approval.

State and federal efforts to reduce healthcare spending could adversely affect our financial condition and results of operations.

Most of our participants are dually eligible, meaning they are qualified for coverage under both Medicare and Medicaid when enrolled in our PACE program, and nearly all our revenue is derived from government payors.

Medicaid is a joint federal and state funded program for healthcare services for low income as well as certain higher-income individuals who qualify for nursing home level of care.

Under broad federal criteria, states establish rules for eligibility, services and payment.

PACE programs are administered at the state level and are financed by both state and federal funds.

Medicaid spending has increased rapidly in recent years, becoming a significant component of state budgets.

This increase, combined with slower state revenue growth, has led both the federal government and many states to institute measures aimed at controlling the growth of Medicaid spending, and in some instances reducing aggregate Medicaid spending.

Due to budget decisions and constraints, which can be unpredictable and influenced by shifting political and economic priorities or the result of macroeconomic conditions, including a potential recession, we may experience negative Medicaid capitated rate payment pressure from certain states where we operate, such as Colorado, where we conduct a significant percentage of our operations.

In addition, as part of past attempts to repeal, replace or modify the ACA and as a means to reduce the federal budget deficit, there have in recent years been congressional efforts to move Medicaid from an open-ended program with coverage and benefits set by the federal government to one in which states receive a fixed amount of federal funds, either through block grants or per capita caps, and have more flexibility to determine benefits, eligibility or provider payments.

If those changes or others are implemented, we cannot predict whether the amount of fixed federal funding to the states will be based on current payment amounts or on lower payment amounts, which would negatively impact those states that expanded their Medicaid programs in response to the ACA.

We expect state and federal efforts to reduce healthcare spending to continue for the foreseeable future.

We have faced and continue to face inspections, reviews, audits and investigations under federal and state government programs and contracts.

These audits have required and may in the future require corrective actions and have resulted

in adverse findings that have negatively affected and continue to affect our business, including our results of operations, liquidity, financial condition and reputation.

Audits have increased and will continue to increase our regulatory compliance costs and have required and may require further change to our business practices, which could negatively impact our participant and revenue growth.

Managing audits, even if we achieve favorable outcomes, is costly, time-consuming and diverts management’s attention from our business.

As previously disclosed, we currently continue to fulfill our obligations under a formal corrective action plan issued by DHCS with respect to findings resulting from the medical review of our San Bernardino, California center.

In general, inspections, reviews, audits, requests for information or investigations with adverse findings have resulted in and may further result in:

• temporary or permanent enrollment sanctions in the affected center(s), as was the case with our Sacramento, California center and our centers in the State of Colorado in 2021;

• refunding amounts we have been paid by the government;

• state or federal agencies imposing corrective action plans, fines, penalties, training, policies and procedures, monitoring, and other requirements;

• temporary suspension of payments;

• debarment or exclusion from participation in federal healthcare programs;

• self-disclosure of violations to applicable regulatory authorities;

• damage to our reputation;

• the revocation of a center’s license or suspension of state attestations to open de novo centers, such as the case with our Bakersfield, California center;

• loss of certain rights under, or termination of, our contracts with government payors.

Any of the results noted above have had and could have material adverse effects on our business and operating results.

Furthermore, the legal, document production and other costs associated with complying with these inspections, reviews, audits, requests for information or investigations are significant.

We are subject to legal proceedings, enforcement actions and litigation, malpractice and privacy disputes, which are costly to defend and could materially harm our business and results of operations.

We are party to lawsuits and legal proceedings from participants, employees, or other third parties for various actions.

These matters are often expensive and disruptive to our business operations.

We also have faced and may in the future face allegations or litigation related to our potential and completed acquisitions and strategic transactions, securities issuances and business practices, including contract claims and public disclosures about our business.

Litigation and regulatory proceedings are protracted and expensive, and the results are difficult to predict.

Certain of these matters include claims for substantial or indeterminate amounts of damages and may include claims for injunctive relief.

Additionally, our litigation costs are and will continue to be significant.

Adverse outcomes with respect to legal proceedings have resulted and may result in significant settlement costs or judgments, penalties, fines and sanctions.

For example, as previously disclosed, in fiscal years 2025 and 2026, we entered into settlement agreements to resolve stockholder lawsuits and a breach of contract lawsuit.

These proceedings resulted in significant settlement payments and expenses, and associated derivative litigation has resulted in the Company’s agreement to adopt enhanced governance measures.

In recent years, government oversight and law enforcement have become increasingly active and aggressive in investigating and taking legal action against potential healthcare fraud and abuse.

In July 2021, the Company received a civil investigative demand from the Attorney General for the State of Colorado under the Colorado Medicaid False Claims Act.

In February 2022, the Company received a civil investigative demand from the Department of Justice (“DOJ”) under the Federal False Claims Act on similar subject matter.

As previously disclosed, the Company and the DOJ have been discussing potential resolutions regarding these matters and are currently negotiating settlements, which remain subject to ongoing governmental review and approval.

During the third quarter of fiscal 2026, the Company recorded an estimated liability in connection with these matters and, based on its expectations regarding potential resolutions, recorded an incremental estimated liability during the fourth quarter of fiscal 2026.

In October 2024, the Company received a civil investigative demand from the DOJ under the Federal False Claims Act on a similar subject matter as the 2022 investigation.

The DOJ closed this investigation in the first quarter of fiscal year 2027.

See Note 9, “Commitments and Contingencies” to the consolidated financial statements included in Part II of this Annual Report for more information.

During fiscal year 2026, we incurred approximately $57.0 million in litigation costs and settlements, including an approximately $37.0 million accrual as of June 30, 2026, substantially all of which is related to the 2021 and 2022 civil investigative demands described above.

Based on the information currently available, we do not believe that a material additional loss in excess of the amount accrued is reasonably possible.

However, there can be no assurance that any settlement will be reached with the DOJ, that the terms of any settlement will be consistent with the Company’s current expectations, or that the Company will not incur additional material losses.

The results of regulatory proceedings, investigations, inquiries, litigation, claims, and audits are inherently unpredictable and uncertain and their actual outcome could differ materially from amounts accrued.

The outcomes of regulatory proceedings, investigations, inquiries, litigation, claims, and audits could be material to our financial condition and operating results for any particular period, depending in part, upon the operating results of such period.

Regardless of the outcome, regulatory proceedings, investigations, inquiries, litigation, claims, and audits have the potential to have an adverse impact on us due to any related defense and settlement costs, diversion of management resources, and other factors.

Furthermore, our business exposes us to potential medical malpractice, professional negligence or other related actions or claims that are inherent in the provision of healthcare services.

Although we maintain third-party professional liability insurance coverage, certain claims against us may exceed the coverage limits of our insurance policies.

Even if any professional liability loss is covered by an insurance policy, these policies typically have substantial deductibles for which we are responsible.

Professional liability claims in excess of applicable insurance coverage could have a material adverse effect on our business, financial condition and results of operations.

In addition, any professional liability claim brought against us, regardless of merit, could result in an increase of our professional liability insurance premiums.

Insurance coverage varies in cost and can be difficult to obtain, and we cannot guarantee that we will be able to obtain insurance coverage in the future on terms acceptable to us or at all.

If our costs of insurance and claims increase, then our earnings could decline.

Our records and other information and materials submitted to government payors may contain inaccurate or unsupportable information applicable to participants’ risk scores, which could cause us to overstate or understate our revenue and subject us to repayment obligations or penalties.

CMS uses the CMS-HCC risk adjustment model to adjust capitation payments for Medicare Advantage organizations and PACE organizations based on enrollee health status.

The records that we submit to CMS include data that factor in the risk scores attributable to participants, and these risk scores affect the risk-adjusted capitation payments we receive.

The data submitted to CMS include diagnosis data received from providers, and CMS regulations reflect a requirement that PACE organizations, in their submission of risk-adjustment data, are subject to data submission requirements set forth in the regulation applicable to Medicare Advantage organizations (42 C.F.R.

§ 460.180(b)(3);

Any inaccuracies, omissions or other issues relating to the recording or documentation of diagnoses or other information submitted in connection with such data could adversely affect our risk scores and resulting revenue for future periods.

The submission of inaccurate, incomplete or erroneous data could result in inaccurate risk-adjusted payments, which may be subject to correction or risk adjustment reconciliations in later periods.

Any such corrected or adjusted information may have an impact on, and be reflected in financial statements for, periods subsequent to the periods for which revenues were originally recorded.

In such cases, we could be required to refund a portion of the revenues that we received, whether due to payment adjustments or government enforcement actions, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Moreover, if the government determines that we have received overpayments due to inaccurate or unsupportable risk-adjustment data, we could be subject to repayment obligations and penalties.

We could be liable to the federal government under the federal False Claims Act (“ FCA ”), and to state governments under FCA cognates, for overpayments and related liability resulting from any such submissions.

FCA liability may include an inflation-adjusted penalty for each violation, plus up to three times the amount of damages sustained by the federal government.

For penalties assessed after July 3, 2025, with respect to covered violations occurring after November 2, 2015, the applicable FCA penalty range is $14,308 to $28,619 per violation.

Such amounts remain unchanged for 2026.

Accordingly, there is a potential for substantial liability in connection with any alleged FCA violations.

We depend on our senior management team and other key employees, and the loss of one or more of these employees or an inability to attract and retain other highly skilled employees could harm our business.

8 unchanged sentences

If we are not able to access superior products or new medical products, including biopharmaceuticals or medical devices, on a cost-effective basis or if suppliers are not able to fulfill our requirements for such products, we could face attrition with respect to our participants or healthcare providers and other personnel and other negative consequences which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

We recently completed the acquisition of certain pharmacy assets and we have no previous experience managing our own pharmacy services.

In January 2025, we completed the acquisition of certain pharmacy assets from TRHC and entered into a services agreement with TRHC to provide management services to our pharmacy business with an initial term of five years.

We have no previous experience in the pharmacy business and may encounter significant problems as a result of our failure to foresee the challenges of providing pharmacy services.

If our assumptions regarding risks and uncertainties that we used to plan our pharmacy business are incorrect or change as we gain more experience operating the business or due to changes in the industry, or if we do not address these challenges successfully, our operating and financial results could suffer materially.

Further, we may not be able to realize the cost benefits we expect from operating our own pharmacy subsidiary due to changes in reimbursement or for other reasons.

Our acquisition of certain pharmacy assets and the management of our own pharmacy services exposes us to novel risks.

In January 2025, we completed the acquisition of certain pharmacy assets from TRHC and entered into a management services agreement with TRHC to provide management services to our pharmacy business with an initial term of five years.

We had no experience in the pharmacy business prior to this acquisition, and our limited operating history may not

be indicative of our ability to manage this business over the longer term.

We may encounter significant problems if we fail to anticipate the challenges of providing pharmacy services, if we are unable to reduce our dependence on third-party management services during the initial term, or if pharmaceutical reimbursement rates decline, we may not realize the anticipated long-term cost benefits of operating our own pharmacy subsidiary.

Further, in the longer term, we may not be able to realize the cost benefits we expect from operating our own pharmacy subsidiary due to changes in reimbursement or for other reasons.

Our pharmacy business also subjects us to additional extensive federal, state, and local regulation governing various aspects of the business, including the distribution and dispensing of drugs;

17 unchanged sentences

The healthcare industry is highly competitive and, if we are not able to compete effectively, our business could be harmed.

We compete directly with national, regional and local providers of healthcare for participants and clinical providers, including new or growing participants and providers.

We also compete directly with payors, such as with Medicare Advantage Special Needs Plans, and other alternate managed care programs for participants.

We compete directly with national, regional and local healthcare providers for participants and clinical providers, including new or growing participants and providers.

We also compete directly with payors, such as with Medicare Advantage Special Needs Plans, accountable care organization (ACO) models, and other alternate managed care programs for participants.

Some of our competitors may have greater brand recognition and be more established in their respective communities than we are, and may have greater financial and other resources than we have.

Further, our current or potential competitors may be acquired by third parties

with greater available resources.

Further, our current or potential competitors may be acquired by third parties with greater available resources.

Competing providers may also offer different programs or services than we do, which, combined with the foregoing factors, may result in our competitors being more attractive to our current participants, potential participants and referral sources.

For example, additional offerings by MA, particularly for dual eligible seniors, and other competitors during 2025 resulted in higher than expected disenrollments during fiscal year 2025.

Furthermore, to the extent that competitive forces cause our budgeted routine capital expenditures to increase in the future beyond the amounts we set to keep them competitive, our financial condition may be negatively affected.

In addition, our contracts with government payors are not exclusive for PACE programs in California, and competitors in California could seek to establish contracts with the state Medicaid agency and CMS to serve PACE eligible participants in our service areas.

For example, the service area for our Sacramento, California center overlaps with an existing PACE program in the region.

In addition, our contracts with government payors are not exclusive for PACE programs in California, Colorado and Florida and competitors could seek to establish contracts with the state Medicaid agency and CMS to serve PACE eligible participants in several of our service areas.

Additionally, as we continue expanding into new geographies, we may encounter competitors with stronger local community relationships or brand recognition, which could give those competitors an advantage in attracting new participants.

Individual physicians, physician groups and companies in other healthcare industry segments, some of which have greater financial, marketing and staffing resources, may become competitors in providing healthcare services, and this competition may have a material adverse effect on our business operations and financial position.

Our presence is currently limited to six states, with a significant percentage of our operations in the State of Colorado.

Our presence is currently limited to six states, with a significant percentage of our operations in the States of California and Colorado.

As a result, we are particularly susceptible to regulatory issues and reduction in budget appropriations for our services or any other adverse developments in that state.

We currently operate in California, Colorado, Florida, New Mexico, Pennsylvania and Virginia.

For the year ended June 30, 2025, almost half of our consolidated revenue was driven by our businesses in Colorado, with 43% of our consolidated revenue derived from contracts specifically with government agencies in the State of Colorado .

Accordingly, any regulatory issues and developments in the six states, and particular in Colorado such as a reduction in Colorado’s budgetary appropriations for our services, whether as a result of fiscal constraints due to recession, emergency situations, such as pandemics, changes in policy or otherwise, have resulted and could in the future result, in a reduction in our capitated fee payments and possibly the loss of contracts, and materially adversely impact our results.

For the year ended June 30, 2026, a majority of our consolidated revenue was driven by our businesses in California and Colorado, with 29% and 42% of our consolidated revenue derived from contracts specifically with government agencies in the States of California and Colorado, respectively .

Accordingly, any regulatory issues and developments in these six states, and

particularly in Colorado, such as a reduction in Colorado’s budgetary appropriations for our services, whether as a result of fiscal constraints due to changes in policy, recession, emergency situations, such as pandemics,or otherwise, have resulted and could in the future result, in a reduction in our capitated fee payments and possibly the loss of contracts, and materially adversely impact our results.

For fiscal year 2027, for Colorado, where we serve the largest cohort of our PACE census, we anticipate a decrease in Medicaid premium rates which will be retroactive for the fiscal year beginning July 1, 2026, which may affect our margins.

Further, our concentrated operations limit our ability to mitigate many of the risks described in these risk factors by a diversification of geographic focus.

11 unchanged sentences

We are highly dependent on information technology networks and systems, including our Electronic Medical Records (“EMR”) system and Epic to securely Process PHI/PII and other sensitive data and information.

Security breaches or disruptions of this infrastructure, whether ours or of our third-party service providers, including physical or electronic break-ins, computer viruses, ransomware or other cybersecurity incidents, attacks by hackers and similar breaches, weather-related disruptions, and employee or contractor error, negligence or malfeasance, have occurred in the past, and have in the past and could in the future, create system disruptions, shutdowns or unauthorized access, acquisition, use, disclosure or modifications of such data or information, and could cause PHI/PII to be accessed, acquired, used, disclosed or modified without authorization, to be made publicly available, or to be further accessed, acquired, used or disclosed.

We use third-party service providers for important aspects of the Processing of employee and participant PHI/PII and other confidential and sensitive data and information, and therefore rely on third parties to manage functions that have material cybersecurity risks.

Because of the sensitivity of the PHI/PII and other sensitive data and information that we and our service providers Process, the security of our technology platform and other aspects of our services, including those provided or facilitated by our third-party service providers, are important to our operations and business strategy.

Security breaches or disruptions of this infrastructure, whether ours or of our third-party service providers, including physical or electronic break-ins, computer viruses, ransomware or other cybersecurity incidents, attacks by hackers and similar breaches, weather-related disruptions, and employee or contractor error, negligence or malfeasance, have occurred in the past, and could in the future, create system disruptions, shutdowns or unauthorized access, acquisition, use, disclosure or modifications of such data or information, and could cause PHI/PII to be accessed, acquired, used, disclosed or modified without authorization, to be made publicly available, or to be further accessed, acquired, used or disclosed.

We use third-party service providers for important aspects of the Processing of employee and participant PHI/PII and other confidential and sensitive data, and therefore rely on third parties to manage functions that have material cybersecurity risks.

Because of the sensitivity of the PHI/PII and other sensitive data and information that we and our service providers Process, the security of our technology platform and other aspects of our services are important to our operations and business strategy.

We have implemented certain administrative, physical and technological safeguards through our Cybersecurity Program to address these risks;

however, such policies and procedures may not address certain HIPAA requirements or address situations that could lead to increased privacy or security risks.

However, some PACE organizations that we have acquired in the past or may acquire in the future may not have implemented such agreements with their third-party service providers, which may expose us to legal claims or proceedings, liability, and penalties.

We may be required to expend significant capital and other resources to protect against security breaches, to safeguard the privacy, security, and confidentiality of PHI/PII and other sensitive data and information, to investigate, contain, remediate, and mitigate actual or potential security breaches, and/or to report security breaches to participants, employees, regulators, media, credit bureaus, and other third parties in accordance with applicable law and to offer complimentary credit monitoring, identity theft protection, and similar services to participants and/or employees where required by law or otherwise appropriate.

Cyber-attacks are becoming more sophisticated including with the use of artificial intelligence, and frequent, and we or our third-party service providers may be unable to anticipate these techniques or to implement adequate protective measures against them or to prevent future attacks.

The prevalence of smart/handheld devices and the remote work environment has increased these risks.

However, some PACE organizations that we have acquired in the past or may acquire in the future may not have implemented such safeguards with their third-party service providers, which may expose us to legal claims or proceedings, liability, and penalties.

We may be required to expend significant capital and other resources to protect against security breaches, to safeguard the privacy, security, and confidentiality of PHI/PII and other sensitive data and information, to investigate, contain, remediate, and mitigate actual or potential security breaches, or to report security breaches to participants, employees, regulators, media, credit bureaus, and other third parties in accordance with applicable law and to offer complimentary credit monitoring, identity theft protection, and similar services to participants or employees where required by law or otherwise appropriate.

Cyber-attacks are becoming more sophisticated including with the use of AI, and frequent, and we or our third-party service providers may be unable to anticipate these techniques or to implement adequate protective measures against them or to prevent future attacks.

Smart/handheld devices and the remote work environment further increases these risks.

We exercise limited control over our third-party service providers and, in the case of some third-party service providers, may not have evaluated the adequacy of their security measures, which increases our vulnerability to problems with services they provide.

3 unchanged sentences

If we or our third-party service providers are unable to prevent or mitigate security breaches, security incidents or privacy violations, or if we or our third-party service providers are unable to implement satisfactory remedial measures with respect to known or future security incidents, or if it is perceived that we have been unable to do so, our operations could be disrupted, we may be unable to provide access to our systems, and we could suffer a loss of participants, loss of reputation, adverse impacts on participant and investor confidence, financial loss, governmental investigations or other actions, regulatory or contractual penalties, and other claims and liability.

In addition, security breaches and incidents and other compromise or inappropriate access to, or acquisition or processing of, PHI/PII or other sensitive data or information can be difficult to detect, and any delay in identifying such breaches or incidents or in providing timely notification of such incidents may lead to increased harm and increased penalties.

In addition, security breaches and incidents or inappropriate access to, or acquisition or processing of, PHI/PII or other sensitive data or information can be difficult to detect, and any delay in identifying such breaches or incidents or in providing timely notification of such incidents may lead to increased harm and increased penalties.

While we maintain insurance covering certain security and privacy damages and claim expenses, we may not carry insurance or maintain coverage sufficient to compensate for all liability and in any event, insurance coverage would not address the reputational damage that could result from a security incident.

Our use of AI and machine learning technologies, and the use of such technologies by our third-party vendors, may expose us to operational, competitive, regulatory, legal and reputational risks that could adversely affect our business, financial condition and results of operations.

We use, and expect to increasingly use, AI and machine learning technologies in our business, including in connection with care coordination and participant engagement, clinical documentation support, risk adjustment coding review, and administrative and operational functions, and we plan to further examine, develop and introduce machine learning algorithms, predictive analytics and other AI technologies to identify trends, anomalies and correlations, support decision-making and enhance our operational efficiency.

We are placing increased reliance on AI-enabled tools, including AI-driven scheduling and analytics to reduce unwarranted variation in provider practice patterns to help offset a more constrained rate environment in fiscal year 2027.

If these tools do not achieve the anticipated cost savings within expected timeframes, experience implementation delays, or require additional investment to deploy effectively across our centers, we may be unable to protect our operating margins in a period of limited rate growth, which could adversely affect our profitability and financial condition.

In addition, certain of our third-party service providers and vendors, including vendors that support our EMR and other information technology systems, utilize AI and machine learning technologies in furnishing products and services to us.

As with many technological innovations, AI presents risks and challenges that could affect its adoption and, therefore, our business.

AI and machine learning models may be flawed, or may produce outputs that are inaccurate, incomplete, unreliable or biased as a result of limitations in the data used to train such models, flaws in model design, or changes in underlying data patterns, and certain AI methodologies may lack transparency or explainability.

If AI-supported processes adversely affect our clinical documentation, coding, risk adjustment submissions, care management or other operational or administrative activities, we could experience reduced revenue, increased medical costs, participant harm, regulatory scrutiny, litigation or reputational harm.

Because our participants are frail, high-cost seniors, any errors or unintended consequences resulting from our or our vendors’ use of AI could disproportionately affect the individuals we serve and result in significant reputational and legal exposure.

The legal and regulatory framework governing the development and use of AI, including in healthcare, is rapidly evolving and, in many respects, uncertain.

Federal agencies, including CMS and HHS, have issued or proposed guidance regarding the governance and permissible uses of AI in federal healthcare programs, and numerous states have enacted or proposed legislation regulating the use of AI in healthcare and other regulated contexts, including requirements relating to transparency, disclosure, bias testing, human oversight and consumer notice.

These requirements, and any changes to them, or to their interpretation or enforcement, could restrict our or our vendors’ permissible uses of AI, require us to implement

additional governance, validation, documentation or reporting measures, or increase our compliance costs, any of which could adversely affect our business.

If our AI governance practices, or those of our third-party vendors, are found to be deficient or non-compliant with applicable laws or regulations, we could be subject to governmental investigations, enforcement actions, sanctions, contractual liability or other adverse consequences.

AI and machine learning technologies are complex and rapidly evolving, and we face significant competition from other companies that may be able to develop or deploy such technologies more quickly or effectively than we can, which could place us at a competitive disadvantage.

Market acceptance of AI-enabled healthcare tools is also uncertain, and our efforts to develop or adopt such technologies may not succeed or may not be responsive to participant, provider, or regulatory expectations.

In addition, the rapid evolution and increased sophistication of AI technologies may intensify cybersecurity and data privacy risks facing our business, including by making cyber-attacks, such as phishing and other social engineering attacks, more sophisticated and difficult to detect, and by introducing new vulnerabilities through our and our third-party vendors’ use of AI tools.

See “-Security breaches, loss of data and other disruptions, including disruptions in our disaster recovery systems, have in the past and could in the future compromise sensitive information related to our business or our participants, or prevent us from accessing critical information and expose us to liability, and could adversely affect our business and our reputation” above.

Any of the foregoing could adversely affect our business, financial condition and results of operations.

A failure to accurately estimate incurred but not reported medical expenses could adversely affect our results of operations.

7 unchanged sentences

In addition, our operational and financial results vary depending upon the time of year in which they are measured.

For example, medical costs vary seasonally depending primarily on the weather because certain illnesses, such as the influenza, COVID-19 and respiratory syncytia viruses, are far more prevalent during colder months of the year.

For example, medical costs vary seasonally depending primarily on the weather because certain illnesses, such as the influenza virus, COVID-19 virus and respiratory syncytia virus, are far more prevalent during colder months of the year.

Historically, we have seen higher levels of per-participant medical costs in the second and third quarters of our fiscal year.

1 unchanged sentence

We currently lease 10 of our 20 centers.

Our leases typically have terms of nine years, and generally provide for renewal or extension options for an average total potential term of approximately 23 years.

Our leases have an average original term of ten years, and generally provide for renewal or extension options.

However, there can be no assurance that these rights will be exercised in the future or that we will be able to satisfy the conditions precedent to exercising any such renewal or extension.

10 unchanged sentences

Risks Related to Regulation

Allegations that we have failed to adhere to all of the complex government laws and regulations that apply to our business have had, and could in the future have, a material adverse effect on our business, results of operations, financial condition, cash flows, reputation and stock price.

We operate in a highly regulated environment at the federal and state level, and failure to adhere to the laws and regulations that apply to our business could result in regulatory scrutiny, which have had, and could in the future have, a material adverse effect on our business, results of operations, financial condition, cash flows, reputation and stock price.

Our operations are subject to extensive federal, state and local government laws and regulations, such as:

• federal Medicare, federal and state Medicaid, and federal and state PACE statutes and regulations, which are continuously changing and evolving;

• federal and state anti-kickback and self-referral laws, which prohibit, among other things, the knowing and willful offer, payment, solicitation or receipt of any bribe, kickback or remuneration, whether in cash or in kind, for referring an individual, in return for ordering, leasing, purchasing or recommending or arranging for or to induce the referral of an individual or the ordering, purchasing or leasing of items or services covered, in whole or in part, by federal healthcare programs, such as Medicare and Medicaid, or by any payor;

• the federal civil false claims laws, including the FCA and associated regulations, which impose civil penalties through governmental, whistleblower or qui tam actions, on individuals or entities for, among other things, knowingly submitting false or fraudulent claims for payment to the government or knowingly making, or causing to be made, a false statement in order to have a claim paid.

• the federal Anti-Kickback Statute and applicable state anti-kickback and self-referral laws, which prohibit, among other things, the knowing and willful offer, payment, solicitation or receipt of any bribe, kickback or remuneration, whether in cash or in kind, for referring an individual, in return for ordering, leasing, purchasing or recommending or arranging for or to induce the referral of an individual or the ordering, purchasing or leasing of items or services covered, in whole or in part, by federal healthcare programs, such as Medicare and Medicaid, or by any payor;

• federal civil false claims laws, including the FCA and associated regulations, which impose civil penalties through governmental, qui tam actions, on individuals or entities for, among other things, knowingly submitting false or fraudulent claims for payment to the government or knowingly making, or causing to be made, a false statement in order to have a claim paid.

When an entity is determined to have violated the FCA, the government may impose civil fines and penalties ranging from $14,308 to $28,619 for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs;

• the federal false claims laws, which impose criminal penalties on individuals who make or present a false, fictitious, or fraudulent claim to the government that the individual knew was false, fictitious, or fraudulent, and was made with the specific intent to violate the law or with a consciousness of wrongdoing;

• federal false claims laws, which impose criminal penalties on individuals who make or present a false, fictitious, or fraudulent claim to the government that the individual knew was false, fictitious, or fraudulent, and was made with the specific intent to violate the law or with a consciousness of wrongdoing;

• state false claims laws, which generally follow the FCA and apply to claims submitted to state healthcare programs, and state health insurance fraud laws that impose penalties for the submission of false or fraudulent claims by providers to commercial insurers or other payors of healthcare services;

1 unchanged sentence

• the federal healthcare fraud statute and its implementing regulations, which created federal criminal laws that prohibit, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

• federal and state laws regarding the collection, use disclosure and protection of personal identifiable information, or PII, and protected health information, or PHI (e.g., HIPAA and the CCPA), and the storage, handling, shipment, disposal and/or dispensing of pharmaceuticals and blood products and other biological materials, and many other applicable state and federal laws and requirements;

• federal and state laws regarding the collection, use disclosure and protection of personal identifiable information, or PII, and protected health information, or PHI (e.g., HIPAA and the CCPA);

• federal and state laws regarding the storage, handling, shipment, disposal and/or dispensing of pharmaceuticals and blood products and other biological materials, and many other applicable state and federal laws and requirements;

• state and federal statutes and regulations that govern workplace health and safety;

• federal and state laws and policies that require healthcare providers to maintain licensure, certification or accreditation to provide services to patients or to enroll and participate in the Medicaid programs, to report certain changes in their operations to the agencies that administer these programs and, in some cases, to re-enroll in these programs when changes in direct or indirect ownership occur;

• federal and state laws and policies that require healthcare providers to maintain licensure, certification or accreditation to provide services to patients, to enroll and to participate in the Medicaid programs, to report certain changes in their operations to the agencies that administer these programs and, in some cases, to re-enroll in these programs when changes in direct or indirect ownership occur;

• federal and state scope of practice and other laws pertaining to the provision of services by qualified healthcare providers, including those pertaining to the provision of services by nurse practitioners and physician assistants in certain settings and requirements for physician supervision of those services;

2 unchanged sentences

consumer communications or consumer-facing activities).

In addition to the above, PACE contracts also impose complex and extensive requirements upon our operations.

In addition to the above, PACE contracts with CMS and state Medicaid agencies also impose complex and extensive requirements upon our operations.

Federal and state manuals, policies, and other guidance may affect our operations.

The various laws, regulations, and agency guidance that apply or relate to our operations are often subject to varying interpretations, and additional laws and regulations potentially affecting healthcare organizations continue to be promulgated and issued.

A violation or departure from any of the legal requirements applicable to our business may result in, among other things, government audits, decreased payment rates, significant fines and penalties, the potential loss of licensure or certification, recoupment efforts or retractions of reimbursement previously paid, voluntary repayments, exclusion from governmental healthcare programs, written warnings, corrective action plans, monitoring, reputational harm, suspension of new enrollment or the restriction of current enrollment, the withholding of payments under the PACE program agreement, and termination of the PACE program agreement.

These legal requirements may be civil or

administrative in nature.

We are subject to federal and state regulations that require PACE organizations to maintain fiscally sound operations, as defined by CMS and applicable state agencies.

We submit regular financial reports to governmental authorities and are subject to routine financial reviews and audits by both CMS and state agencies.

We periodically submit financial reports to governmental authorities and are subject to routine financial reviews and audits by both CMS and state agencies.

For example, federal and state governments evaluate our assets and liabilities, cash flows, and net operating surpluses against specific regulatory requirements.

From time to time, federal and state authorities may identify aspects of the finances of our PACE organizations that do not comply with federal or state requirements and may require us to submit clarifications and/or take action to adjust the capitalization or other financial status of such entities.

From time to time, federal and state authorities may identify aspects of the finances of our PACE organizations that do not comply with federal or state requirements and may require us to submit clarifications or take action to adjust the capitalization or other financial status of such entities.

As state agencies promulgate additional regulations applicable to PACE and issue sub-regulatory guidance, we will have to allocate sufficient resources to ensure compliance with both federal and state regulations.

We endeavor to comply with all legal requirements, including structuring our relationships with physicians, providers, and other third parties to comply with state and federal anti-kickback laws and other applicable healthcare laws.

However, the laws and regulations in these areas are complex, changing and often subject to varying interpretations, and any failure to satisfy applicable laws and regulations could have a material adverse impact on our business, results of operations, financial condition, cash flows and reputation.

We may face penalties, including penalties under the FCA, if we fail to report and return government overpayments within 60 days of when the overpayment is identified and quantified.

We endeavor to comply with all legal requirements.

We further endeavor to structure our relationships with physicians, providers, and other third parties to comply with state and federal anti-kickback laws and other applicable healthcare laws.

We deploy considerable resources to monitor laws and regulations and implement necessary changes.

However, the laws and regulations in these areas are complex, evolving and often subject to varying interpretations, and any failure to satisfy applicable laws and regulations could have a material adverse impact on our business, results of operations, financial condition, cash flows and reputation.

We may face penalties, including penalties under the FCA, if we fail to report and return government overpayments within 60 days of when any such overpayment is identified and quantified.

Risk Factors, “Risks Related to Our Business--We are subject to legal proceedings, enforcement actions and litigation, malpractice and privacy disputes, which are costly to defend and could materially harm our business and results of operations.” Additionally, the federal government has used the FCA to prosecute a wide variety of alleged false claims and fraud allegedly perpetrated against Medicare, Medicaid, and other federally funded healthcare programs.

Moreover, following amendments to the federal Anti-Kickback Statute under the ACA, claims that are implicated by Anti-Kickback Statute violations are also subject to liability under the FCA, including qui tam or whistleblower suits.

Moreover, following amendments to the federal Anti-Kickback Statute under the ACA, claims that are implicated by federal Anti-Kickback Statute violations are also subject to liability under the FCA, including qui tam or whistleblower suits.

In recent years, the number of suits brought in the medical industry by private individuals has increased dramatically.

1 unchanged sentence

In addition to the provisions of the FCA, the federal government can use several criminal statutes to prosecute persons who are alleged to have submitted false or fraudulent claims for payment to the federal government.

If any of our operations are found to violate these or other government laws or regulations, we could suffer severe consequences that would have a material adverse effect on our business, results of operations, financial condition, cash flows, reputation and stock price, including:

If any of our operations are found to violate these or other laws or regulations, we could suffer severe consequences, including those set forth below, that could have material adverse effects on our business, results of operations, financial condition, cash flows, reputation or stock price:

• suspension, termination or exclusion of our participation in government payment programs;

• refunds of amounts received in violation of law or applicable payment program requirements dating back to the applicable statute of limitation periods;

• loss of applicable licenses, certifications or other government approvals;

• recoupment of prior Medicare or Medicaid payments or withholding of future payments;

• termination of federal and state PACE contracts;

• refunds of amounts received in violation of law or applicable payment program requirements subject to applicable statute of limitation periods;

• criminal or civil liability, fines, damages or monetary penalties for violations of healthcare fraud and abuse laws, including the Anti-Kickback Statute, Civil Monetary Penalties Statute and FCA, or other failures to meet regulatory requirements;

• enforcement actions by governmental agencies and/or state law claims for monetary damages for patients or employees relating to breach or impermissible use or disclosure of, or other incident relating to PHI and other types of personal data or PII that we collect, use, and disclose, in violation of federal or state privacy laws, including, for example and without limitation, HIPAA or state data privacy and security laws;

• enforcement actions by governmental agencies or private claims for monetary damages or otherwise, in connection with any data breach or impermissible use or disclosure of PHI, PII or other personal data in violation of applicable laws;

• mandated changes to our practices or procedures that could significantly increase operating expenses;

5 unchanged sentences

It is possible that criminal proceedings may be initiated against us and/or individuals in our business in connection with investigations by the federal government.

The results of such lawsuits cannot be predicted.

The results of any such lawsuits cannot be predicted.

Qui tam actions are filed under seal and impose a mandatory duty on the U.S.

DOJ to investigate such allegations, and because qui tam suits are filed under seal, we could be subject to suits of which we are not aware or have been ordered by the presiding court not to discuss or disclose.

We, our healthcare professionals, and the centers in which we operate, are subject to various federal, state and local licensing, certification and other laws and regulations, relating to, among other things, the quality of medical care, equipment, privacy of health information, physician relationships, telehealth, personnel and operating policies and procedures.

We, the healthcare professionals we employ, and the centers in which we operate, are subject to various federal, state and local licensing, certification and other laws and regulations, relating to, among other things, the quality of medical care, equipment, privacy of health information, physician relationships, telehealth, personnel and operating policies and procedures.

Failure to comply with these licensing and certification laws, regulations and standards could result in cessation of our services, recoupment of prior payments by government payors, corrective action plans, the suspension of participant enrollment or requirements to make significant changes to our operations and can give rise to civil or, in certain cases, criminal penalties.

While we endeavor to comply with federal, state and local licensing and certification laws and regulations and standards as we interpret them, the laws and regulations in these areas are complex, changing and often subject to varying interpretations.

While we endeavor to comply with federal, state and local licensing and certification laws and regulations and standards as we interpret them, the laws and regulations in these areas are complex, evolving and often subject to varying interpretations.

Any failure to satisfy applicable laws and regulations could have a material adverse impact on our business, results of operations, financial condition, cash flows, and reputation.

6 unchanged sentences

Federal and state legislators routinely introduce and consider proposed legislation that would impact Medicare, Medicaid, and PACE funding and operations, and state and federal agencies also consider and implement regulations and guidance that impact our business.

For example, the OBBBA includes provisions that would significantly reduce federal Medicaid spending over the next decade through new work requirements for Medicaid recipients aged 19 to 64, increase the frequency of eligibility verifications of Medicaid enrollees, introduce cost-sharing measures for Medicaid beneficiaries, and reduce funding for long-term care and home- and community-based services.

See “Risk Factors—If we are unable to attract new participants and retain existing participants, our revenue growth will be adversely affected” and “Risk Factors—Our revenues and operations are dependent upon a limited number of government payors, particularly Medicare and Medicaid.” Additionally, changes in the leadership of federal agencies under the Trump Administration may also lead to new policies and changes in such agencies’ regulations and operations.

Similarly, changes in private payor reimbursement policies could lead to adverse changes in Medicare, Medicaid and other governmental healthcare programs, which could have a material adverse effect on our business, financial condition and result of operations.

We cannot predict with certainty the impact that any particular federal and state healthcare legislation or regulation will have on us, but such changes could impose new and/or more stringent regulatory requirements on our activities or result in reduced payment rates, any of which could adversely affect our business, financial condition, and results of operations.

Similarly, changes in private payor reimbursement policies or applicable legal requirements could lead to adverse changes in Medicare, Medicaid and other governmental healthcare programs, which could have a material adverse effect on our business, financial condition and result of operations.

We cannot predict with certainty the impact that any particular federal and state healthcare legislation or regulation will have on us, but such changes could impose new or more stringent regulatory requirements on our activities or result in reduced payment rates, any of which could adversely affect our business, financial condition, and results of operations.

There can be no assurance that regulators will agree that we have structured our agreements and operations in material compliance with applicable healthcare laws and regulations or that we will be able to successfully address changes in the current legislative and regulatory environment.

5 unchanged sentences

For example, in Pennsylvania, the statutes that pertain to the employment of healthcare practitioners by healthcare centers do not explicitly include a PACE organization in the list of healthcare centers by which a healthcare practitioner may be employed.

While we endeavor to comply with state corporate practice of medicine laws and regulations as we interpret them, the laws and regulations in these areas are complex, changing, and often subject to varying interpretations.

The interpretation and enforcement of these laws vary significantly from state to state.

In California, legislation enacted in 2025 seeks to strengthen oversight and enforcement of the corporate practice of medicine doctrine.

State laws are complex, evolving, and often subject to varying interpretations.

Penalties for violations of the corporate practice of medicine vary by state and may result in physicians being subject to disciplinary action, as well as forfeiture of revenues from payors for services rendered.

3 unchanged sentences

These laws and regulations include HIPAA.

HIPAA establishes a set of national privacy and security standards for the protection of PHI by health plans, healthcare clearinghouses, and certain healthcare providers, referred to as covered entities, which includes the Company, and the business associates with whom such covered entities contract for services.

HIPAA is a federal law that establishes a set of privacy and security standards for the protection of PHI by health plans, healthcare clearinghouses, and certain healthcare providers, referred to as covered entities, which includes the Company, and the business associates with whom such covered entities contract for services.

A business associate is any person or entity (other than members of a covered entity’s workforce) that performs a service for or on behalf of a covered entity involving the use or disclosure of PHI.

1 unchanged sentence

HIPAA imposes mandatory penalties for certain violations.

Under a notice of enforcement discretion issued by HHS in 2019 and annually adjusted by the HHS, penalties for violations of HIPAA and its implementing regulations start at $100 (not adjusted for inflation) per violation and are not to exceed approximately $63,000 (not adjusted for inflation) per violation, subject to a cap of approximately $1.9 million (not adjusted for inflation) for violations of the same standard in a single calendar year.

Under a notice of enforcement discretion issued by HHS in 2019 and annually adjusted by the HHS, penalties for violations of HIPAA and its implementing regulations start at $145 (adjusted for inflation) per violation and are not to exceed approximately $73,011 (adjusted for inflation) per violation, subject to a cap of approximately $2.2 million (adjusted for inflation) for violations of the same standard in a single calendar year.

However, a single breach incident can result in violations of multiple standards.

In addition, HIPAA provides for criminal penalties of up to $250,000 and ten years in prison, with the severest penalties for obtaining and disclosing PHI with the intent to sell, transfer or use such information for commercial advantage, personal gain or malicious harm.

In addition, HIPAA provides for criminal penalties of up to $250,000 and ten years in prison, with the severest penalties for obtaining and

disclosing PHI with the intent to sell, transfer or use such information for commercial advantage, personal gain or malicious harm.

HIPAA also authorizes state attorneys general to file suit on behalf of their residents.

3 unchanged sentences

It also tasks HHS with establishing a methodology whereby harmed individuals who were the victims of breaches of unsecured PHI may receive a percentage of the civil monetary penalty fine paid by the violator;

however, as of 2026, HHS has not adopted a methodology for harmed individuals to recover such amounts.

HIPAA further requires that individuals be notified of any unauthorized acquisition, access, use or disclosure of their unsecured PHI that compromises the privacy or security of such information, with certain exceptions related to unintentional or inadvertent use or disclosure by employees or authorized individuals.

HIPAA specifies that such notifications must be made “without unreasonable delay and in no case later than 60 calendar days after discovery of the breach.” If a breach affects 500 individuals or more, it must be reported to HHS without unreasonable delay, and in no case later than 60 calendar days after discovery, and HHS will automatically investigate the breach and post the name of the

entity on its public breach portal.

If a breach involves fewer than 500 people, the covered entity must record it in a log and notify HHS at least annually.

HIPAA specifies that, for breaches affecting 500 individuals or more, such notifications must be made “without unreasonable delay and in no case later than 60 calendar days after discovery of the breach,” and HHS will automatically investigate the breach and post the name of the covered entity on its public breach portal.

If a breach involves fewer than 500 people, the covered entity must record it in an annual notification to HHS.

Breaches affecting more than 500 residents in the same state or jurisdiction must also be reported to the local media.

Looking ahead, it is possible that Congress could pursue a federal privacy bill to harmonize privacy regimes across states.

In addition to HIPAA, numerous other federal and state laws and regulations protect the confidentiality, privacy, availability, integrity and security of individually identifiable information.

State statutes and regulations vary from state to state, and these laws and regulations in many cases are more restrictive than, and may not be preempted by, HIPAA and its implementing rules.

These laws and regulations are often uncertain, contradictory, and subject to changing or differing interpretations, and we expect new laws, rules and regulations regarding privacy, data protection, and information security to be proposed and enacted in the future.

It is possible that Congress could pursue a federal privacy bill to harmonize privacy regimes across states, but currently, state laws and regulations can be complex, in conflict with one another, and subject to in some cases ambiguous or unclear drafting, and we expect new laws, rules and regulations regarding privacy, data protection, and information security to be proposed and enacted in the future.

For example, the CCPA provides certain exceptions for PHI, but is still applicable to certain PII we process in the ordinary course of our business.

The effects of the CCPA are wide-ranging and afford consumers certain rights with respect to PII, including a private right of action for data breaches involving certain personal information of California residents.

In addition, the California Privacy Rights Act of 2020, or CPRA, expands the CCPA’s requirements, including by adding a new right for individuals to correct their personal information and establishing a new regulatory agency to implement and enforce the law.

In addition, the California Privacy Rights Act of 2020, or CPRA, expanded the CCPA’s requirements, including by adding a new right for individuals to correct their personal information and by establishing a new regulatory agency to implement and enforce the law.

Other states have enacted similar privacy laws that impose new obligations or limitations in areas affecting our business and we continue to assess the impact of this state legislation on our business as additional information and guidance becomes available.

Efforts at the federal level to enact similar laws have been ongoing.

As new data security laws are implemented, we may not be able to timely comply with such requirements, or such requirements may not be compatible with our current processes.

1 unchanged sentence

Consumers may also be afforded a private right of action for certain violations of privacy laws.

This complex, dynamic legal landscape regarding privacy, data protection, and information security creates significant compliance issues for us and potentially restricts our ability to process data and may expose us to additional expense, adverse publicity, and liability.

This complex, dynamic legal landscape regarding privacy, data protection, and information security requires deployment of significant compliance resources, potentially restricts our ability to process, use or disclose data and may expose us to additional expense, adverse publicity, and liability.

We cannot guarantee that our data privacy and security measures both internally and with our third parties will be adequate, and we may be subject to cybersecurity, ransomware or other security incidents, especially as the rapid evolution of AI leads to more complex and sophisticated attacks.

3 unchanged sentences

We also publish statements to our participants that describe how we handle and protect PHI.

If federal or state regulatory authorities, such as the FTC, or private litigants consider any portion of these statements to be untrue, we may be subject to claims of deceptive practices, which could lead to significant liabilities and consequences, including, without limitation, costs of responding to investigations, defending against litigation, settling claims, and complying with regulatory or court orders.

The FTC sets expectations for failing to take appropriate steps to keep consumers’ personal information secure, or failing to provide a level of security commensurate to promises made to individuals about the security of their personal information (such as in a privacy notice) may constitute unfair or deceptive acts or practices in violation of Section 5(a) of the Federal Trade Commission Act (“FTC Act”).

If federal or state regulatory authorities, such as the FTC or state attorneys general, or private litigants consider any portion of these statements to be untrue, we may be subject to claims or enforcement actions alleging deceptive or unfair practices.

Any such claims or actions could result in significant liabilities and consequences, including costs of responding to investigations, defending against litigation, settling claims complying with regulatory or court orders, modifying our business practices, and where authorized by applicable law, paying civil penalties or other monetary relief.

The FTC has used its authority under Section 5(a) of the Federal Trade Commission Act (the “FTC Act”), which prohibits unfair or deceptive acts or practices in or affecting commerce, to challenge companies’ privacy and data security practices, including

alleged failures to provide a level of security commensurate with promises made to individuals about the security of their personal information.

The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.

Individually identifiable health information is considered sensitive data that merits stronger safeguards.

With respect to privacy, the FTC also sets expectations that companies honor the privacy promises made to individuals about how the company handles consumers’ personal information;

failure to honor promises, such as the statements made in a privacy policy or on a website, may also constitute unfair or deceptive acts or practices in violation of the FTC Act.

Individually identifiable health information may be considered sensitive data that merits stronger safeguards.

With respect to privacy, the FTC expects that companies honor the privacy promises made to individuals about how the company handles consumers’ personal information;

a failure to honor promises, including within statements made in a privacy policy or on a website, may also constitute unfair or deceptive acts or practices in violation of the FTC Act.

Additionally, the FTC has the power to enforce promises as it interprets them, and events that we cannot fully control, such as data breaches, may result in FTC enforcement and could result in civil penalties or enforcement actions.

2 unchanged sentences

Our existing indebtedness could adversely affect our business.

As of June 30, 2025, we had total outstanding debt of (i) $60.0 million principal amount under the Term Loan Facility (as defined in Note 7, “Long-term Debt” to the consolidated financial statements in this Annual Report), and (ii) $2.2 million principal amount under the convertible term loan (included in “Liabilities held for sale” in the consolidated

financial statements in this Annual Report).

As of June 30, 2026, we had total outstanding debt of $48.8 million principal amount under the Term Loan A Facility (as defined in Note 7, “Long-term Debt” to the consolidated financial statements in this Annual Report).

Our indebtedness requires us to use cash flows for purposes of satisfying our debt obligations.

19 unchanged sentences

These fluctuations may be driven by a variety of factors, many of which are outside of our control, including, but not limited to:

• our ability to execute our growth strategy, including our ability to identify and successfully complete acquisitions and expand via de novo centers within existing and new markets;

• our inability to control expenses and increases to the cost of care, including as a result of the composition of our participant pool, macroeconomic factors such as such as labor shortages, high inflation, and health emergencies;

• our ability to execute our growth strategy, including our ability to increase the number of participants, identify and successfully complete acquisitions and expand via de novo centers within existing and new markets;

• our inability to control expenses and increases to the cost of care, including as a result of the composition of our participant pool, macroeconomic and geopolitical factors and health emergencies;

• the results of current and future, routine and non-routine inspections, reviews, audits and investigations under federal and state government programs and contracts, and any resulting sanctions or remediation efforts as a result of such government actions;

• legal proceedings, enforcement actions and litigation, malpractice and privacy disputes to which we are currently and may in the future be party to;

• legislative and regulatory changes and federal and state budgetary pressures.

The impact of any one of the factors discussed above or any other factors discussed in this “Risk Factors” section, or the cumulative effects of a combination of such factors, could result in significant fluctuations and unpredictability in our quarterly and annual operating results.

4 unchanged sentences

In addition, securities markets worldwide have experienced, and are likely to continue to experience, significant price and volume fluctuations.

This market volatility, as well as general economic, market or political conditions, could continue to subject the market price of our shares to wide price fluctuations regardless of our operating performance.

This market volatility, as well as general economic, geopolitical or market conditions, could continue to subject the market price of our shares to wide price fluctuations regardless of our operating performance.

Because we do not anticipate paying any regular cash dividends on our common stock for the foreseeable future, any return on investment in our common stock is solely dependent upon the appreciation of the price of our common stock on the open market, which due to historic fluctuation may not occur.

The trading price of our shares fluctuates in response to various factors, including:

• developments and results of audits, sanctions, investigations and litigation;

• macroeconomic and geopolitical conditions, including high inflation, elevated interest rates, trade wars, weather and public health events;

• legislative and regulatory changes and federal and state budgetary pressures, and other political developments;

• market conditions in our industry or the broader stock market;

4 unchanged sentences

• additions or departures of key personnel;

• regulatory or political developments;

• economic and macroeconomic conditions, including inflationary pressures, increased interest rates, trade wars, weather and public health events;

• developments and results of audits, sanctions, investigations and litigation;

• investors’ perception of us and our prospects;

9 unchanged sentences

In particular, for so long as the Principal Shareholders continue to own a significant percentage of our common stock, the Principal Shareholders will be able to cause or prevent a change of control of us or a change in the composition of our Board and could preclude any unsolicited acquisition of us.

The concentration of ownership could deprive shareholders of an opportunity to receive a premium for their shares of common

stock as part of a sale of us and ultimately might affect the market price of our common stock.

The concentration of ownership could deprive shareholders of an opportunity to receive a premium for their shares of common stock as part of a sale of us and ultimately might affect the market price of our common stock.

In addition, this concentration of ownership may adversely affect the trading price of our common stock because investors may perceive disadvantages in owning shares in a company with significant shareholders.

Additionally, we are party to a Director Nomination Agreement (defined herein) with the Principal Shareholders that provides the Principal Shareholders the right to designate:

Additionally, we are party to a Director Nomination Agreement with the Principal Shareholders that provides the Principal Shareholders the right to designate:

(i) all of the nominees for election to our Board for so long as the Principal Shareholders collectively beneficially own at least 40% of the Original Amount (as defined therein);

22 unchanged sentences

Accordingly, shareholders do not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

We qualify as an “emerging growth company” and a “smaller reporting company” and we have elected to comply with reduced public company reporting requirements, which could make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act and a “smaller reporting company” as defined by the Exchange Act.

For as long as we continue to qualify as an emerging growth company, we are eligible for certain exemptions from various public company reporting requirements.

These exemptions include, but are not limited to, (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (ii) reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements, (iii) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved, and (iv) an extended transition period to comply with new or revised accounting standards applicable to public companies.

We have chosen to take advantage of the extended transition period to comply with new or revised accounting standards applicable to public companies.

Additionally, as long as we qualify as a smaller reporting company, we are required to present only the two most recent fiscal years of audited financial statements in our Annual Reports on Form 10-K.

We expect to qualify as an emerging growth company until the end of fiscal year 2026, which is five fiscal years following the first sale of our common stock pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), which occurred in March 2021.

Even after fiscal year 2026 when we no longer qualify as an “emerging growth company,” we may still qualify as a “smaller reporting company” if the market value of our common stock held by non-affiliates is below $250 million (or $700 million if our annual revenue is less than $100 million) as of December 31 in any given year, which would allow us to continue taking advantage of certain of these exemptions.

We qualify as a “smaller reporting company” and we have elected to comply with reduced public company reporting requirements, which could make our common stock less attractive to investors.

We are a “smaller reporting company” as defined by the Exchange Act.

For as long as we continue to qualify as a smaller reporting company, we are eligible for certain exemptions from various public company reporting requirements, including (i)reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements and (ii) being required to present only two years of audited financial statements in our Annual Reports on Form 10-K.

We no longer qualify as an “emerging growth company” and, as a result, are no longer eligible for the exemptions previously available to us as an emerging growth company, including the exemption from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act and the extended transition period for complying with new or revised accounting standards.

We expect to continue to qualify as a “smaller reporting company” if the market value of our common stock held by non-affiliates is below $250 million (or $700 million if our annual revenue is less than $100 million) as of December 31 in any given year, which would allow us to continue taking advantage of certain of these exemptions.

As a result, the information that we provide to holders of our common stock may be different than those shareholders might receive from other public reporting companies in which they hold equity interests.

1 unchanged sentence

If some investors find our common stock less attractive as a result of any choice we make to reduce disclosure, there may be a less active trading market for our common stock and the market price for our common stock may be more volatile.

The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business, particularly after we no longer qualify as an “emerging growth company” or a “smaller reporting company.”

The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business, particularly since we no longer qualify as an “emerging growth company.”

As a public company, we are subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act, the listing requirements of Nasdaq and other applicable securities rules and regulations.

Compliance with these rules and regulations creates legal and financial compliance costs, makes some activities more difficult, time-consuming and costly and increases demand on our systems and resources, particularly after we no longer qualify as an “emerging growth company” or “smaller reporting company.”

Compliance with these rules and regulations creates legal and financial compliance costs, makes some activities more difficult, time-consuming and costly and increases demand on our systems and resources, particularly now that we no longer qualify as an “emerging growth company” and are subject to additional requirements, including compliance with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.

The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal controls and procedures for financial reporting.

If we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we or our auditors may conclude that we do not have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act.

If we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we or our auditors may conclude that we do not have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act.

The existence of any material weaknesses or significant deficiency in internal controls over financial reporting would require management to devote significant time and incur significant expenses to remediate any such issue.

1 unchanged sentence

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure, such as disclosures related to climate emissions, and their varying interpretations, are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming.

The application of these laws may evolve over time as new guidance is provided by regulatory and governing bodies, resulting in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

The application of these

laws may evolve over time as new guidance is provided by regulatory and governing bodies, resulting in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and there could be a material adverse effect on our business, financial condition and results of operations.

13 unchanged sentences

Our certificate of incorporation designates the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our shareholders and the federal district courts of the United States as the exclusive forum for litigation arising under the Securities Act, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us.

Pursuant to our certificate of incorporation, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the United States District Court for the District of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim of breach of fiduciary duty owed by, or other wrongdoing by, any our directors, officers, employees or agents to us or our shareholders, creditors or other constituents, or a claim of aiding and abetting any such breach of fiduciary duty, (iii) any action asserting a claim against the us or any of our directors or officers or other employees arising pursuant to any provision of the DGCL or our certificate of incorporation or our Bylaws (as either may be amended, restated, modified, supplemented or waived from time to time), (iv) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or our bylaws, (v) any action asserting a claim against us or any of our directors or officers or other employees governed by the internal affairs doctrine or (vi) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the DGCL.

time to time), (iv) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or our bylaws, (v) any action asserting a claim against us or any of our directors or officers or other employees governed by the internal affairs doctrine or (vi) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the DGCL.

Our certificate of incorporation also provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.

However, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce a duty or liability created by the Securities Act or

the rules and regulations thereunder;

However, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce a duty or liability created by the Securities Act or the rules and regulations thereunder;

accordingly, we cannot be certain that a court would enforce such provision.

9 unchanged sentences

We are party to a registration rights agreement with TCO Group Holdings, L.P., the investment vehicle through which the Principal Shareholders hold their investment, which requires us to effect the registration of the Principal Shareholders’ shares in certain circumstances.

We have filed a registration statement on Form S-3 covering the resale of shares of our common stock held by TCO Group Holdings, L.P.

The Principal Shareholders are also entitled to participate in certain of our registered offerings, subject to the restrictions in the registration rights agreement.

These registration rights would facilitate the resale of such securities into the public market, and any such resale would increase the number of shares of our common stock available for public trading.

The filing of the registration statement on Form S-3 and these registration rights would facilitate the resale of such securities into the public market, and any such resale would increase the number of shares of our common stock available for public trading.

In addition, we have registered shares of common stock that we may issue under our equity compensation plans.

11 unchanged sentences

Future offerings of debt or equity securities by us may materially adversely affect the market price of our common stock.

In the future, we may attempt to obtain financing or to further increase our capital resources by issuing additional shares of our common stock or offering debt or other equity securities, including senior or subordinated notes, debt securities convertible into equity or shares of preferred stock.

securities convertible into equity or shares of preferred stock.

In addition, we may seek to expand operations in the future to other markets which we would expect to finance through a combination of additional issuances of equity, corporate indebtedness and/or cash from operations.

1 unchanged sentence

Upon liquidation, holders of such debt securities and preferred shares, if issued, and lenders with respect to other borrowings would receive a distribution of our available assets prior to the holders of our common stock.

Debt securities convertible

into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion.

Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion.

Preferred shares, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our common stock.

1 unchanged sentence

Thus, holders of our common stock bear the risk that our future offerings may reduce the market price of our common stock and dilute their stockholdings in us.

If we are unable to comply with the continued listing requirements of the Nasdaq, our common stock could be delisted, affecting our common stock’s market price and liquidity and reducing our ability to raise capital.

Our common stock is currently listed on Nasdaq.

If we fail to satisfy the continued listing standards of Nasdaq, such as, for example, Nasdaq’s minimum bid price requirement or stockholders’ equity requirements, Nasdaq may issue a non-compliance letter or initiate delisting proceedings.

If we are unable to maintain compliance with the continued listing requirements of Nasdaq, our common stock could be delisted, making it more difficult to buy or sell our securities and to obtain accurate quotations, and the price of our securities could suffer a material decline.

Delisting could also impair our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors and employees and fewer business development opportunities.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors